Town of Boylston v. Commissioner of Revenue

• Decision Date: 08 May 2001
• Citation: 434 Mass. 398,749 N.E.2d 684
• Parties: (Mass. 2001) TOWN OF BOYLSTON vs. COMMISSIONER OF REVENUE & others(1) (and a companion case). 8502
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

749 N.E.2d 684 (Mass. 2001)

TOWN OF BOYLSTON vs. COMMISSIONER OF REVENUE & others(1) (and a companion case).

8502

Massachusetts Supreme Court

May 8, 2001.

June 26, 2001

County: Suffolk.

Present: Marshall, C.J., Greaney, Ireland, Spina, Cowin, Sosman, & Cordy, JJ

Summary: Massachusetts Water Resources Authority. Taxation, Value, Payment by Commonwealth in lieu of taxes. Statute, Construction. Words, "Watershed."

Appeal from a decision of the Appellate Tax Board.

The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.

John R. Maciolek (Gregory J. Angelini with him) for the plaintiff.

Diane C. Tillotson for the Massachusetts Water Resources Authority.

Susan Paulson, Assistant Attorney General, for Commissioner of Revenue & another, was present but did not argue.

GREANEY, J.

The town of Boylston (Boylston) appeals from a decision of the Appellate Tax Board (board) upholding valuations made by the Commissioner of Revenue (commissioner), under G. L. c. 58, §§ 13-17, of land located in Boylston that is part of the Wachusett watershed and reservoir. The land is held by the Metropolitan District Commission (MDC), division of watershed management, for the Massachusetts Water Resources Authority (MWRA). The commissioner made the valuations to determine the payments in lieu of taxes (PILOT) due to Boylston by the MWRA under G. L. c. 59, § 5G.² The board concluded that the land under the waters of the Wachusett reservoir should not be valued for purposes of computing PILOT and that the commissioner's valuation methodologies were properly formulated and applied. We transferred the appeal here on our own motion and now affirm the board's decision.

The background of the case may be summarized as follows. As of January 1, 1990, and again as of January 1, 1995, the commissioner undertook to value Wachusett watershed and reservoir lands held by the MDC within Boylston for purposes of computing PILOT under G. L. c. 59, § 5G, to reimburse Boylston for tax revenues lost as a result of the Commonwealth's ownership of watershed property. Using differing valuation methodologies, the commissioner assigned a value of $100 an acre to the land under the Wachusett reservoir in 1990 (before applying a size-based discount), and approximately $70 an acre for the land under the reservoir in 1995. The commissioner estimated the total value of the Wachusett reservoir and watershed lands held by the MDC within Boylston as $10,940,200 on January 1, 1990, and $10,610,694 as of January 1, 1995.³

Boylston appealed from both valuations to the board, and the appeals were consolidated. Boylston maintained that the land beneath the Wachusett reservoir was part of the Wachusett watershed for § 5G purposes, and that the commissioner appropriately had included the submerged land in calculating the § 5G PILOT, but Boylston contended that the commissioner had substantially undervalued that land. The board determined, however, that "the land beneath the Wachusett Reservoir was not part of the Wachusett Watershed and, therefore, was not part of the § 5G PILOT program. Accordingly, the Commissioner should not have included the land beneath the Wachusett Reservoir in his valuations." Despite the commissioner's improper inclusion of values for the submerged land, the board affirmed the commissioner's net valuations because "small discrepancies" with respect to the amount and type of eligible acreage "more than offset, in favor of Boylston, any difference in the total net value of the MDC-held land." This appeal by Boylston from the board's decision followed.

1. Because the commissioner's valuations were made under G. L. c. 58, §§ 13-17, the board, in reviewing the valuations, was "perform[ing] a more traditional appellate function, rather than mak[ing] a de novo determination of value." Assessors of Sandwich v. Commissioner of Revenue, 393 Mass. 580, 586 (1984). In assessing the board's decision, we, therefore, do not apply a substantial evidence test, but, instead, examine to see whether the board committed any error of law in concluding that the commissioner acted in accordance with G. L. c. 58, §§ 13-17. Id.

The first question is whether the board correctly concluded that the land under the waters of the Wachusett reservoir should be excluded for the purposes of computing PILOT to Boylston under G. L. c. 59, § 5G. Boylston argues that the language and legislative history of § 5G demonstrate that the board erred. The commissioner relies on the same sources, and principles of statutory construction, to argue that the board's conclusion was correct.

The key inquiry is what land is included within the general, undefined term "watershed" used in § 5G. Because § 5G does not provide a definite answer to the question, it is appropriate to consult other sources to obtain a resolution, see Henry v. Board of Appeals of Dunstable, 418 Mass. 841, 843 (1994); Oxford v. Oxford Water Co., 391 Mass. 581, 587-588 (1984), and we now proceed to do so.

(a) The legislative history underlying § 5G, and the statutes creating the Wachusett reservoir, provide pertinent information. That history reaches back more than one hundred years when, recognizing the need to create a water supply for Boston and its surrounding suburbs, the Legislature authorized the creation of the Wachusett reservoir (initially reservoir on the Nashua River). St. 1895, c. 488, §§ 1, 4, and 6. A board of health report, referenced in the 1895 statute, described the proposed reservoir as requiring 5,163 acres of land in Boylston and other municipalities; 4,195 of which would be submerged land, and the remainder to serve as a "margin" around the reservoir, including islands. 1895 House Doc. No. 500, at 130 (cited in St. 1895, c. 488, § 3). That same report also described the watershed in these terms: "The boundary of the water-shed was reconnoitered for its whole length, and carefully located upon the State map. Every part of the water-shed has been visited, and all of the swamps, ponds and reservoirs have been located with care." Id. at 125-126 and Plan No. 4. The 1895 legislation also directed that annual $2,000 payments be made to Boylston "as part of the expenses of said metropolitan water works," and specified that the Commonwealth's water board "shall pay no tax or other payment to [Boylston] on account of any property held by said water board for the purposes of a water supply." St. 1895, c. 488, § 16. The following year, the $2,000 payment was increased to $3,000. St. 1896, c. 436, § 1.

By 1897, the Legislature had imposed a dual payment scheme, explicitly distinguishing between payments for land within and without the proposed reservoir. With respect to land within the proposed reservoir, the Legislature amended St. 1895, c. 488, § 16, to provide that, until Nashua River waters were acquired to supply the proposed reservoir, the Commonwealth would make interim annual tax payments based on the assessed value of the property taken to create it; thereafter, the $3,000 annual payments would compensate the town for the reservoir land. St. 1897, c. 467, § 1. Land outside the limits of "said proposed reservoir," however, was treated differently. The statute required the Commonwealth to make annual payments based on an assessed value of the land so long as the Commonwealth owned the land, but the statute went on to specify:"[N]o part of the fifty-one hundred and sixty-three acres described in the report of the state board of health on a metropolitan water supply made to the general court in the year eighteen hundred and ninety-five as necessary for said reservoir and the margin around the same shall be included in determining the amount to be paid in consequence of the taking of property outside the limits of said reservoir and margin."

St. 1897, c. 467, § 1. It is thus apparent, from primary legislative sources, that the Legislature intended to, and did, treat the original 5,163 acres described in the board of health report as "reservoir" land differently from watershed lands outside the reservoir's limits.

That distinction has continued. In 1928, the Legislature repealed that portion of St. 1895, c. 488, § 16, which related to lands "outside the limits of the Wachusett reservoir in the town of Boylston [held by the Commonwealth] for the purposes of the metropolitan water supply." St. 1928, c. 290, § 1.⁴ Among other matters, the statute provided, for the first time, that G. L. c. 59, §§ 6 and 7, would "apply to the reimbursement of [Boylston] by the commonwealth on account of said land." Id. The Legislature left unchanged the payment scheme for lands within the Wachusett reservoir, which continued to be governed by St. 1895, c. 488, as amended.⁵

In the ensuing fifty-six years, G. L. c. 59, §§ 6 and 7, were renumbered and revised, but none of the changes modified the quantum of land to be valued for the purposes of PILOT in any relevant manner.⁶ Indeed, the parties do not dispute that from 1895, until at least the mid-1980's, St. 1895, c. 488, governed payments to Boylston on account of land within the limits of the Wachusett reservoir.

In 1984, the Legislature established the MWRA and authorized it to maintain and operate the water supply system for the greater Boston area. St. 1984, c. 372, § 1. Initially, the MWRA was required by G. L. c. 59, § 5G, inserted by St. 1984, c. 372, § 40A, to make PILOT solely with respect to lands held by the Commonwealth within the Quabbin and Ware River watersheds, and no provision was made in § 5G to provide payments for reservoir land, or to apply § 5G to land within the Wachusett watershed or reservoir.

The omission did not go unnoticed. In 1986, the Legislature directed the Department of Revenue to conduct a study to determine the then-current level of PILOT to Boylston and other communities, as well as what such payments would be if they were based on "current assessed valuation" of such lands, as required by...