Opinion of the Justices, In re

• Decision Date: 13 May 1955
• Citation: 332 Mass. 769,126 N.E.2d 795
• Parties: In re OPINION OF THE JUSTICES.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 795

126 N.E.2d 795

332 Mass. 769

In re OPINION OF THE JUSTICES.

Supreme Judicial Court of Massachusetts.

May 13, 1955.

To the Honorable the Senate of the Commonwealth of Massachusetts:

The undersigned Justices of the Supreme Judicial Court respectfully submit these answers to questions set forth in an order of the Senate dated April 14, 1955, and transmitted to us on April 20.

The questions relate to the constitutionality of a proposed act for the development of an area of about twenty-eight acres of land in the Back Bay section of the city of Boston hitherto principally used as a railroad yard by the Boston and Albany Railroad, but the use of which for that purpose apparently either has been abandoned or is about to be abandoned. The proposed act was submitted as 'Appendix A' to the report of the special commission created to investigate the subject by c. 98 of the Resolves of 1954. A copy of the report is annexed to the order transmitted to us.

The proposed act is somewhat complicated. We shall not attempt to state its provisions in any greater detail than seems necessary to an understanding of the questions and answers. After preliminary definition of words and expressions used in the act, § 1, there are legislative declarations in substance that the tax structure of the city is threatened by the fact that the yard will not be usefully employed and will be 'an area of economic blight and a potential breeding place for crime and juvenile delinquency and will therefore adversely affect the value of adjacent properties'; that the development of the yard in the manner set forth in the act is necessary to support the economic well-being of the city and the Commonwealth; that private enterprise without the aids provided in the act will not undertake orderly and integrated development; that the public interest requires development in accordance with a broad plan, including transportation connections, a street system, parks, parking facilities, and a convention hall or civic auditorium, all subject to the special controls set forth in the act; that without the special provisions of the act no such plan will be formulated; and that to accomplish these 'public purposes' the special treatment with respect to taxation contained in the act is desirable and necessary. § 2.

The act then provides for the creation in a department of the city of a board of three commissioners to be known as the Back Bay Development Commission. § 3. This commission in the name and behalf of the city is to acquire by eminent domain or otherwise and to sell options to purchase lands within the area. Such options are to be sold only as a unit and only to the highest responsible bidder after certain prescribed advertising, each bid to be accompanied by a certified check on, or a treasurer's or cashier's check issued by, a responsible bank for $300,000 to be retained by the city as liquidated damages if the bid is accepted and the bidder fails to carry out his part as provided in the act. § 4.

The successful bidder who acquires the options is to cause a corporation to be formed under c. 156 of the General Laws, to which all of the options are to be conveyed. The corporation shall then exercise the options and shall submit to the commission a plan showing the lands acquired and to be acquired, the portions to be devoted to public ways, public parks, public buildings or other public uses, and the proposed subdivision of the remainder into lots or sites for private uses, with the nature of such uses and the location and description of public utilities and such other data as the commission may require. If, after reference to the planning board and to certain other boards of the city, the commissions finds that development in accordance with the plan will not be detrimental to the amenities, health, safety, convenience, morals, or welfare of the city or of the community in which the area is situated; that the development will increase the assessable value of said lands not less than ten times that of January 1, 1954; and that the development will include an auditorium and exhibition hall suitable for exhibitions, convenitons, and other shows and gatherings, the commission shall approve the plan, requiring, however, as a condition precedent to such approval a covenant of the corporation with the city that the corporation will develop the lands in conformity with the plan and will grant to the city for $1 all lands to be devoted to public uses and all sewer and water systems within public places, and will in general construct the public ways, parks, and public places and sewer and water system shown on the plan. §§ 5, 6. There are provisions under which the city may purchase the convention hall or civic auditorium by paying the construction cost without including the value or cost of the land. § 7.

The corporation may borrow on mortgage from time to time such sums as it may determine, and the commission shall approve the amount of borrowings and the interest rate and repayment schedule, if in its opinion the aggregate of borrowings will not exceed the aggregate construction costs and the interest rate and repayment schedule are reasonable. While any such borrowings remain outstanding 'the powers, duties or existence of the corporation shall not be diminished or impaired in any way that will affect adversely the interests and rights of the lenders.' § 8.

Special and unusual provisions relative to taxation of the real estate of the corporation are contained in § 9 when read in connection with the definition of 'operating receipts' in § 1. Section 9, clause A, provides that for each of the first five calendar years next following the year in which the act becomes effective the taxes 'shall be a sum equal to the product obtained by multiplying $5,670,000 by the tax rate applicable for each such year.' That is to say, no matter how much value shall have been added to the land by new construction, and although the development plan is supposed to increase the assessable value of the land not less than ten times that of January 1, 1954 the valuation for tax purposes for five years is fixed by the statute and must never exceed $5,670,000. It is stated in the order of the Senate that the assessed value for 1954 was $4,550,000. Section 9, clause A, therefore means that no matter how much building should be done in the first five years, the assessed value of the properties could not be increased over that in 1954 by more than $1,120,000.

After the first five years a new method of taxation is provided under the act, § 9, clauses D and E. Until the corporation has paid all of its approved borrowings no decree shall be entered foreclosing the right to redeem any parcel from a tax title, nor shall other methods of collecting the tax be employed, if so much of the tax has been paid as would have been assessable upon a valuation of three times the value of the parcel on January 1, 1954, with interest at four per cent from October 1 of the year of assessment, and if in addition thereto has been paid 'so much of the balance of the tax as is covered by the operating receipts of the corporation in the year of assessment' with interest at four per cent from the last day of January of the year following the year of assessment, and if in any year in which the 'operating receipts' exceed the real estate tax obligations of the corporation such excess has been paid on account of the unpaid balance of real estate taxes assessed in prior years. Section 1 contains an elaborate definition of 'operating receipts' which it is not necessary to repeat here in detail. In general 'operating receipts' are gross receipts after deducting expenses, including interest and payments on borrowings, reserves in accordance with usual accounting practices, the tax assessable on three times the value of the corporation's real estate valued as of January 1, 1954, and certain other taxes. There is also the peculiar provision that in any year in which the 'operating receipts' would exceed the amount by which one half of the taxes assessed on real estate to the corporation for that year is greater than the sum which would be assessable on three times the value of that real estate on January 1, 1954, one third of the excess is to be excluded from the gross receipts. All this appears to mean that in any given year, no matter how much value has been added by buildings on the land, the corporation cannot be compelled to pay more than a tax on three times the value as of 1954 unless there are 'operating receipts,' and even if there are, such receipts are fully applicable to the taxes only up to half the taxes assessed, and if the sum which for present purposes may with sufficient accuracy be termed profits amounts to more than that half, the corporation may keep one third of the excess and apply only two thirds toward taxes.

Although collection of the taxes is deferred in the circumstances hereinbefore stated, it is provided that the tax lien shall continue until the tax has been paid or abated. § 9, clause D. It is further provided in § 10 that (a) upon the expiration of forty-five years after the year in which the act becomes effective, or (b) when the corporation has paid the aggregate of its approved borrowings, or (c) when it shall have performed all its obligations to the city and shall have notified the commission of its election to be free from the provisions of the act, whichever shall first occur, the corporation shall have all the rights and be subject to all the duties of a corporation organized under c. 156 of the General Laws, but shall not be released from its obligation to pay any unpaid taxes, nor shall the lien therefor be released.

Not only is it possible that the actual collection of taxes may be delayed for as long as forty-five years after the act becomes effective, as hereinbefore appears, but there are provisions in §§ 11 and 12, which might, as far as we...