West Tisbury Assessors Lose Tax Challenge
By ALEXIS TONTI
The Massachusetts Court of Appeals this week overturned a decision by the state Appellate Tax Board and ruled that the Martha's Vineyard Land Bank is exempt from all taxation, upholding the power vested in the conservation agency by its enabling legislation.
The case is an appeal of a decision first made by the West Tisbury board of assessors that ordered the land bank to pay about $700 in taxes on property bought in fiscal year 2002.
The ruling was issued Wednesday.
The case tested the scope of the land bank's state-mandated tax exemption. The West Tisbury assessors argued that the exemption does not kick in until the start of a new fiscal year, while the land bank asserted that the exemption is uncategorical. The point is critical because of the potential impact of taxation on highly valued properties.
In its decision, the court of appeals dismissed a number of arguments by the West Tisbury assessors and repeatedly hailed the language of the land bank's enabling legislation as unambiguous.
"[P]rotected by the sword, shield and buckler of several clear provisions of its enabling act, the commission is entitled to the real estate tax exemption and tax abatement that it claims with respect to the property at issue," the Hon. Kenneth Laurence wrote in the six-page ruling.
The court of appeals also concluded broadly that the land bank does not have to pay any taxes.
The case was argued before the court of appeals in February.
The land bank is charged with preserving and enhancing the unique character of the Vineyard through the acquisition, management and protection of land. It was created by an act of the state legislature in 1985. The tax exemption was part of a series of amendments added to the enabling legislation in 1987.
The case arose after the West Tisbury board of assessors rejected the land bank's petition for a tax abatement for the South Indian Hill Woodlands, a 6.17-acre parcel on State Road purchased by the land bank in October of 2001.
Generally when a land transaction takes place in the middle of the fiscal year, the buyer and seller enter into an agreement by which the new owner foots the tax bill from the date of sale forward.
In this case, the West Tisbury assessors argued that the land bank's tax exemption did not take effect immediately. The assessors said the land bank was responsible for about eight months in property taxes, covering the time from the date of sale until the new fiscal year July 1.
"We are disappointed by the decision. We think that the appeals court misinterpreted some law and basically we are just examining our options right now," said attorney Ellen Hutchinson of the Boston firm Kelley Law Associates, who is representing the West Tisbury board of assessors.
The assessors' argument was based in part on a comparison to the Nantucket Islands Land Bank, a similar public agency created about the same time as the Vineyard land bank. The enabling legislation for the Nantucket land bank specifically mandates that the real estate be exempt from taxation from the date of purchase.
But the court of appeals said that argument is trumped by the Vineyard land bank's enabling act, which says the legislation is to be "liberally construed."
In addition, the land bank used its purchase of the southern woodlands in Oak Bluffs to illustrate the financial implications for the agency were it made responsible for partial-year taxes.
Judge Laurence addressed the point:
"[The] commission at oral argument credibly asserted that the potential financial impact of taxability in such situations is far from negligible and could be substantial - a conclusion readily confirmed by the single recent example of the commission's June 2004 purchase of 190 acres in Oak Bluffs for a price of $18.6 million. The half-year tax liability of the commission on that single property . . . would be well over $40,000," wrote Judge Laurence.
"We are all very happy with the outcome, and also especially pleased because this ruling affirms one of the most important philosophies undergirding the land bank, which is that the land bank and the towns are the same thing. We're just another part of local government, and taxing the land bank is like taxing yourself," land bank executive director James Lengyel said.
The land bank is funded by a two per cent fee that applies to Island real estate transactions.
The Oak Bluffs board of assessors in fact was the first Island town to question the land bank's enabling legislation, in 2001. The purchase under scrutiny was the Weahtaqua Springs Preserve, a property near the blinker light. The board of assessors rejected the land bank's application for a tax abatement.
The land bank did not appeal the Oak Bluffs decision because of a technicality, but they decided to press their case at the next opportunity.
Since 2001 every Island town except Aquinnah has assessed the land bank for partial-year taxes on newly purchased properties. The towns of West Tisbury and Oak Bluffs have taken the additional step of putting the contested properties into tax title - the first stage of a lengthy process by which a town can seize property.
About 10 land bank properties are currently in tax title.
Mr. Lengyel said the land bank will ask the towns to release the properties.