The Massachusetts Court of Appeals reviewed a decision by the Appellate Tax Board in Russell Block Associates v. Board of Assessors of Worcester, ultimately affirming its determination granting the taxpayer a tax abatement on a parking garage. The primary issue in the case was whether the garage was a multiple-use property appropriately classified as part residential and part commercial.
In 1992, the taxpayer constructed a residential building and the five-story, 300-parking space garage at issue in the case, which is located across a side street from the residential building. Between 100 and 250 parking spaces in the garage are reserved for exclusive use by tenants of the residential building. The Worcester board of assessors had classified the garage as a mixed-use property, taxing 85 percent of its value at the lower residential rate since it was built. In 2012, however, the assessors changed its classification to be entirely commercial. The taxpayer appealed, and the Appellate Tax Board granted an abatement.
Classification for purposes of determining tax rates depends on the use of the real property as residential, open space, commercial, or industrial. The law also defines a mixed-use category of real property, which allocates the percentage of valuation on each portion of the property devoted to that particular use. The assessors argued that the parking garage at issue is not used for habitation and does not satisfy the requirements of the statute. However, the Court of Appeals disagreed, recognizing that the statute’s definition of residential includes accessory land, buildings, or improvements incidental to such habitation. The court went on to explain that the parking garage was part of the development plan of the residential building, and the residents of the building needed parking just as any other resident would. The garage was built to serve these needs, meeting the zoning and lending requirements for the development of the residential building. Therefore, the parking garage was incidental to habitation within the meaning of the law.
The second question answered by the court was whether the garage satisfies the exclusive use requirement, which requires that such accessory land, buildings, or improvements incidental to habitation must be used exclusively by the residents of the property or their guests. The assessors argued that the garage did not qualify as residential because the entire garage was not used exclusively by the tenants or their guests. The Court of Appeals analyzed the phrase “used exclusively” in the context of a multi-use property, since the phrase is not defined by statute. The court noted that in defining a multiple-use property, the legislature recognized that one property could have mixed purposes, and in such cases, the exclusive use language refers to the portion of the property used exclusively for residential accessory purposes. The court further explained that adopting the assessor’s interpretation would disregard the statute’s provision for mixed-use classifications and the commissioner’s guidelines. Accordingly, the court affirmed the tax board’s decision, classifying the garage as part residential and part commercial for tax purposes.
At the Massachusetts firm of Pulgini & Norton, our experienced real estate attorneys advise clients in a variety of property law issues, including land use and zoning matters, easements, and other land transactions. To discuss your real estate needs with one of our attorneys, call (781) 843-2200 or contact us online.
More Blog Posts:
Appeals Court of Massachusetts Affirms Denial of Tax Abatement in Real Estate Case, Massachusetts Real Estate Lawyer Blog, published June 17, 2015
Massachusetts Appeals Court Upholds ATB Decision in Tax Abatement Case, Massachusetts Real Estate Lawyer Blog, published March 19, 2015