NOTICE: All slip opinions and orders are subject to formal
revision and are superseded by the advance sheets and bound
volumes of the Official Reports. If you find a typographical
error or other formal error, please notify the Reporter of
Decisions, Supreme Judicial Court, John Adams Courthouse, 1
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
1030; SJCReporter@sjc.state.ma.us
14-P-283 Appeals Court
RUSSELL BLOCK ASSOCIATES vs. BOARD OF ASSESSORS OF WORCESTER.
No. 14-P-283.
Suffolk. November 10, 2014. - September 16, 2015.
Present: Rubin, Brown, & Maldonado, JJ.
Taxation, Real estate tax: abatement, classification of
property. Real Property, Tax.
Appeal from a decision of the Appellate Tax Board.
John F. O'Day, Jr., Assistant City Solicitor, for board of
assessors of Worcester.
Daniel I. Cotton for the taxpayer.
BROWN, J. The board of assessors of Worcester (assessors)
challenges a decision of the Appellate Tax Board (board)
granting the taxpayer an abatement of the fiscal year (FY) 2012
tax on its parking garage. The issue for consideration is
whether the board erred by finding and ruling that the subject
property was a multiple-use property appropriately classified as
2
part residential and part commercial.1 See G. L. c. 59, § 2A(b).
We conclude that the board's classification determination was a
reasonable interpretation of the statutory language.
Accordingly, we affirm the decision of the board.
1. Facts. We summarize the board's findings.2 In 1992,
the taxpayer, Russell Block Associates, constructed a twenty-
four story residential building (Tower) in the city of
Worcester. The Tower development project was conditioned on the
construction of a parking garage.3 The five-story garage in
issue contains 300 parking spaces and is located across a small
side street from the Tower. There are no dwelling units in the
garage. By contract entitled "Agreement to Provide Parking
Spaces," the taxpayer agreed to reserve a minimum of one hundred
spaces and up to a maximum of 250 spaces for exclusive use by
the tenants of the Tower.
1
The assessors have not disputed either the board's
reduction of the property's fair cash valuation or the
percentage allocations of valuation assigned to each
classification.
2
The board based its findings of fact on the testimony and
the exhibits presented at the evidentiary hearing. None of the
evidence was provided to this court. In fact, the sole document
provided from the proceedings below was a copy of the board's
"Decision with Findings." We have confined our analysis to the
facts contained in that decision.
3
Sufficient off-street parking for the proposed use was
necessary to comply with city zoning requirements and to meet
financing requirements.
3
For the next nineteen years, the assessors classified the
garage as a mixed-use property, taxing a large percentage of its
value at the lower residential rate.4 In classifying the
property in this manner, the assessors followed the guidelines
issued by the Commissioner of Revenue (commissioner).5 See G. L.
c. 58, § 3; McNeill v. Assessors of W. Springfield, 396 Mass.
603, 606 (1986). Beginning in FY 2012, however, the assessors
classified the property as entirely commercial.
2. Standard of review. Our task is to embrace an
interpretation "consistent with the purpose of the statute and
in harmony with the statute as a whole." Adams v. Assessors of
Westport, 76 Mass. App. Ct. 180, 183-184 (2010), quoting from
Sudbury v. Scott, 439 Mass. 288, 296 n.11 (2003). We give a
measure of deference to the board's expertise in interpreting
the tax statutes it is charged with administering. See French
v. Assessors of Boston, 383 Mass. 481, 482 (1981); Raytheon Co.
v. Commissioner of Rev., 455 Mass. 334, 337-338 (2009).
4
In 2010, for example, the taxpayer derived eighty-five
percent of its total income from the residential tenants of the
Tower. The board also found that at all material times, the
tenants occupied "significantly more than the minimum number of
spaces."
5
In FY 2011, the assessors, applying the commissioner's
three-digit coding system, classified part of the garage as code
106 (residential "accessory land with improvement - garage,
etc.") and part as code 336 (commercial parking garage).
4
3. Discussion. Classification determinations for taxation
purposes turn on the use of the real property. See G. L. c. 59,
§ 2A(b). The statute sets forth four distinct use classes:
residential, open space, commercial, and industrial. The
statute also recognizes the existence of a fifth, mixed-use
category of real property, providing in pertinent part, "Where
real property is used or held for use for more than one purpose
and such uses result in different classifications, the assessors
shall allocate to each classification the percentage of the fair
cash valuation on the property devoted to each use according to
the guidelines promulgated by the commissioner." G. L. c. 59,
§ 2A(b), as amended through St. 2008, c. 522, § 3.
To start, we agree with the assessors that the doctrine of
estoppel has no application in the case. See Cameron Painting,
Inc. v. University of Mass., 83 Mass. 345, 350 (2013). Turning
to the merits, the primary question in dispute is whether the
garage qualified in part for residential classification. See
G. L. c. 59, § 2A(b).6 The assessors first contend that the
parking garage is not "used or held for human habitation
6
General Laws c. 59, § 2A(b), provides, in relevant part,
"The assessors . . . shall classify such real property according
to the following uses: - 'Class one, residential', property
used or held for human habitation containing one or more
dwelling units . . . . Such property includes accessory land,
buildings or improvements incidental to such habitation and used
exclusively by the residents of the property or their guests
. . . ."
5
containing one or more dwelling units," G. L. c. 59, § 2A(b),
see note 6, supra, and thus cannot satisfy the definitional
requirements of § 2A(b). We disagree. This argument ignores
the second sentence of the definition, providing that "accessory
land, buildings or improvements incidental to such habitation"
are included in the definition of residential property. G. L.
c. 59, § 2A(b). See McNeill v. Assessors of W. Springfield, 396
Mass. at 606 (describing the statutory definition of residential
property as "extremely broad and general"). Compare Salem &
Beverly Water Supply Bd. v. Assessors of Danvers, 63 Mass. App.
Ct. 222, 222-224, 226-227 (2005) (reservoir and surrounding
watershed land did not fit within the definition of accessory
residential property).
Applying the statutory language to the facts of the case,
the board concluded that for the tax year in question, eighty-
five percent of the garage served an "accessory" use for the
residential tenants of the Tower. The assessors, we think,
cannot show that the conclusion was erroneous. The parking
garage was part and parcel of the Tower development plan. The
residents of the Tower, as all city dwellers, need a place to
park their vehicles. The garage was designed and built to serve
the tenants' parking needs and indeed was required to do so to
meet zoning and lending requirements for the development of the
Tower. On these facts, the board was warranted in concluding
6
that the garage was an accessory building "incidental to . . .
habitation" within the meaning of the statute. Cf. St. Paul's
Sch. v. Concord, 117 N.H. 243, 257 (1977) (applying analogous
New Hampshire tax exemption for schools) ("The tax status of
. . . parking lots should be determined according to the status
of the buildings which they serve. Where a building is
partially taxed, or where one or more buildings served are
taxed, a proportionate value of the parking lot should also be
taxed"), quoted with approval in Lynn Hosp. v. Assessors of
Lynn, 383 Mass. 14, 19 (1981). Compare also in the zoning
context Henry v. Board of Appeals of Dunstable, 418 Mass. 841,
844 (1994), quoting from 6 Rohan, Zoning and Land Use Controls
§ 40A.01, at 40A-3 (1994) (for zoning purposes, "[a]n accessory
or 'incidental' use is permitted as 'necessary, expected or
convenient in conjunction with the principal use of the land'").
The second, more difficult question raised by the assessors
is whether the property satisfies the exclusive use requirement
of the definition in § 2A(b): "Such property includes accessory
land, buildings or improvements incidental to such habitation
and used exclusively by the residents of the property or their
guests" (emphasis supplied). G. L. c. 59, § 2A(b). The
assessors contend that where, as here, the entire garage was not
used exclusively by the tenants of the Tower or their guests, it
did not qualify for residential status.
7
Although the plain text may be construed in the manner
suggested by the assessors, the phrase "used exclusively" is not
defined by statute,7 and in the context of a multiple-use
property, the statutory language in issue is amenable to a
second interpretation. As noted above, after setting out the
four distinct classes based on use, § 2A(b) recognizes the
existence of a fifth, mixed-use category. That is, the
Legislature recognized that a single property may be used for
more than one purpose and that such uses result in different
classifications.8 The garage, as the board justifiably found,
7
By way of contrast, until June 15, 1988, Florida statutory
law defined "exclusive use of property" for tax exemption
purposes to mean "used one hundred percent for exempt purposes";
thereafter, the definition was amended to mean "use of property
solely for exempt purposes." See Fla. Stat. § 196.012(2); Saint
Andrew's Sch. of Boca Raton, Inc. v. Walker, 540 So.2d 207, 207-
209 (Fla.Dist.Ct.App. 1989) (holding that notwithstanding its
residential quality, faculty housing was used exclusively for
educational purposes and entitled to exemption).
8
The Legislature expressly directed local assessors making
mixed-use classification determinations to follow the
commissioner's guidelines. G. L. c. 59, § 2A(b). As the board
noted in support of its decision, the commissioner's coding
system contains codes for multiple-use properties, including
code 013 for "Multiple-use, primarily Residential" property.
See Department of Revenue's Division of Local Services Property
Type Classification Codes (revised March, 2012), at 3. The
example given by the commissioner of a code 013 property is "a
building with a retail store on the first floor, apartments on
the upper floors, and a major portion of the related land . . .
reserved for tenant parking." The high-rise residential Tower,
which we are informed has (1) commercial business on the first
floor and (2) a dedicated parking garage, a major portion of
which is reserved and, as the board found, actually used for
8
was one of them. Reading § 2A(b) as a harmonious whole, as we
are required to do, the exclusive use language is appropriately
read in this context as referring to that portion of the
property used exclusively for residential accessory purposes.
Any ambiguities that exist must be resolved in favor of the
taxpayer. See Adams v. Assessors of Westport, 76 Mass. App. Ct.
at 184.
The use of the property is the critical criterion for
classification purposes. Adopting the interpretation urged by
the assessors would require us to disregard the use restriction
on the garage, the statute's provision for mixed-use
classifications, and the commissioner's guidelines, which were
followed by the assessors for nineteen years. We prefer an
interpretation that is "the most reasonable and sensible in the
circumstances." Bridgewater State Univ. Foundation v. Assessors
of Bridgewater, 463 Mass. 154, 160-161 (2012) (rejecting literal
interpretation that would lead to absurd or unreasonable
consequences). See Adult Home at Erie Station, Inc. v. Assessor
& Bd. of Assessment Review of Middleton, 10 N.Y.3d 205, 214
(2008) (word "exclusively" for tax exemption purposes should not
be read literally, but rather means principally or primarily).
Contrast Sisterhood of Holy Nativity v. Tax Assessors of
residential tenant parking, could be found to fall within this
code. See note 4, supra.
9
Newport, 73 R.I. 445, 447-448 (1948) (building must be used
exclusively for religious purposes to entitle owner to
exemption; primary use is not sufficient).
We agree with the assessors that in the sense of being
operated for profit the parking garage is strictly commercial.
However, their argument that the taxpayer's prospective customer
base was not relevant to the use inquiry is mistaken. In Lynn
Hosp. v. Assessors of Lynn, 383 Mass. at 15-16, the facts
established that the adjacent parking garage owned by the
hospital, a charitable organization granted tax-exempt status
under G. L. c. 59, § 5, Third, was used not only by parkers on
their way to the hospital (an exempt use), but also by parkers
going to a nonexempt private medical building as well as by the
general public. The Supreme Judicial Court held that the
taxpayer was entitled to a partial exemption for the percentage
of the parking garage actually used for exempt purposes. Id. at
17-19. Compare Vassar Bros. Hosp. v. Poughkeepsie, 97 A.D.3d
756, 759 (N.Y.App.Div. 2012) (law provided exempt property must
be "used exclusively" for exempt purposes; as only portion of
garage was allocated for use reasonably incidental to purpose of
hospital, parking garage was partially exempt).
The Lynn Hospital case falls within a long line of cases
supporting, notwithstanding the absence of express statutory
authority, the practice of carving out, based on actual use,
10
portions of real property for partial exemption and partial
taxation. See Milton Hosp. & Convalescent Home v. Assessors of
Milton, 360 Mass. 63, 70 (1971), and cases cited; WB&T Mort. Co.
v. Assessors of Boston, 451 Mass. 716, 717-718, 724-725 (2008);
Mount Auburn Hosp. v. Assessors of Watertown, 55 Mass. App. Ct.
611, 613, 620 (2002). Although the Lynn Hospital case arose
under a different tax statute, the facts of that case support
the board's application of the apportionment principle by
analogy.
In sum, the board was warranted in classifying the parking
garage as a multiple-use property subject to taxation under the
allocation method specified by § 2A(b). The decision of the
Appellate Tax Board is affirmed.
So ordered.
RUBIN, J. (dissenting). The statute in this case is
unambiguous, and because it is a fundamental rule of statutory
construction in our Commonwealth that the words of an
unambiguous statute should be interpreted according to their
plain meaning, I respectfully dissent. See Bridgewater State
Univ. Foundation v. Assessors of Bridgewater, 463 Mass. 154, 158
(2012).
The words used by the Legislature in the definition of
"residential" property set out in G. L. c. 59, § 2A(b), as
amended through St. 2008, c. 522, § 3, are clear. "Class one,
residential" property status is limited to "property used or
held for human habitation containing one or more dwelling units
. . . . Such property includes accessory land, buildings or
improvements incidental to such habitation and used exclusively
by the residents of the property or their guests. . . ."
(Emphasis added.) The garage here of course is not used for
human habitation, but is an "accessory . . . building[]"; the
board's findings establish, and it is conceded by the taxpayer,
that it has never been used exclusively by the Tower residents
and their guests. Therefore, the garage is not residential
property within the meaning of the statute.
In an attempt to get around this, the court majority
argues, at least at first, that the statute is ambiguous, and
that the exclusive use language can refer in this context "to
2
that portion of the property used exclusively for residential
accessory purposes." Ante at . But the statutory
language is clear. The garage is an accessory building, and an
"accessory . . . building[]" must be "used exclusively" by the
residents or guests of the residential property to which it is
an accessory to be entitled to classification as residential
property. To say that only a portion of the building must be
"used exclusively" by residents or guests is not to construe an
ambiguous clause about exclusive use. It is to read it out of
the statute.
To be sure, the statute also contains a "mixed use"
provision that states, "Where real property is used or held for
use for more than one purpose and such uses result in different
classifications, the assessors shall allocate to each
classification the percentage of the fair cash valuation of the
property devoted to each use according to the guidelines
promulgated by the commissioner" (emphasis added). G. L.
c. 59, § 2A(b). But in this case the use of a part of the
garage for residents of the Tower does not result in a
"different classification[]" of that portion of the garage from
the commercial classification of the rest of the garage. None
of the garage is residential property because the garage is
neither used for human habitation nor is it used exclusively by
residents of the Tower or its guests. Rather, the entire garage
3
-- the parts used by Tower residents and the parts available to
the public -- is all properly classified as "'Class three,
commercial', property used or held for use for business purposes
and not specifically includible in another class . . . ." G. L.
c. 59, § 2A(b). The majority would rely on Lynn Hosp. v.
Assessors of Lynn, 383 Mass. 14, 17-19 (1981), in support of a
mixed-use classification, but that case holds only that under a
different statute that does not contain an "exclusive use"
provision, that portion of a garage owned by a hospital and
which it used itself can be exempt from taxation even though
another portion is not. It has no bearing on the issue in this
case.
Of course there are debates about the proper way to
construe statutes. Indeed, there is some indication that
questions concerning the proper canons of statutory construction
are becoming more pronounced in our legal culture. Compare,
e.g., King v. Burwell, 135 S.Ct. 2480, 2495 (2015)
("Petitioners' arguments about the plain meaning of [the
Affordable Care Act] are strong. But while the meaning of the
phrase [relied upon by Petitioners] may seem plain 'when viewed
in isolation,' such a reading turns out to be 'untenable in
light of [the statute] as a whole.' . . . In this instance, the
context and structure of the Act compel us to depart from what
would otherwise be the most natural reading of the pertinent
4
statutory phrase"), with id. at 2497 (Scalia, J., dissenting)
("Let us not forget . . . why context matters: It is a tool for
understanding the terms of the law, not an excuse for rewriting
them").
This debate may in part be reflected here: The court
majority begins by saying the statute is ambiguous, but then,
perhaps a bit more candidly, it acknowledges that it is not
reading the statute "literally." Rather, it says that it is
construing it in the way that is "the most reasonable and
sensible in the circumstances." Ante at , quoting from
Bridgewater State Univ. Foundation v. Assessors of Bridgewater,
463 Mass. 154, 160-161 (2012).
But the Supreme Judicial Court has instructed that
statutory language that is clear and unambiguous is conclusive
as to legislative intent, see Commissioner of Correction v.
Superior Ct. Dept. of the Trial Ct., 446 Mass. 123, 124 (2006),
and that this rule "has particular force in interpreting tax
statutes." Gillette Co. v. Commissioner of Revenue, 425 Mass.
670, 674 (1997), quoting from Commissioner of Revenue v.
AMIWoodbroke, Inc., 418 Mass. 92, 94 (1994). We are bound to
apply these rules. Is the clear construction of the statute I
put forth "absurd or unreasonable" such that it may be ignored
under the Supreme Judicial Court's decision in Bridgewater State
Univ. Foundation v. Assessors of Bridgewater, 463 Mass. at 158?
5
I am not persuaded. In fact, I don't see how one can even make
the case. Taxing a garage used by residents of a building
across the street as "commercial" property rather than taxing a
portion of it as "residential" property obviously isn't
"absurd," and I can't see how a choice either way could be
called "unreasonable." These are context-specific lines created
in order to balance all the various interests that go into
providing property with tax classifications. They are
archetypical decisions of legislatures that, when expressed
clearly, should not -- really cannot -- be subject to judicial
second guessing.
Do I think it is utterly unfair that the board of assessors
of Worcester taxed this garage at a mixed-use rate for some
twenty years, then changed its mind and upended the taxpayer's
reasonable expectations? You bet. But as the court majority
correctly notes, ante at , under settled law, the city
cannot be estopped by its prior action.
So that leaves me where I began: with a clear statute that
requires reversal of the Appellate Tax Board decision. With
respect, I dissent.