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.