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Court rules that company has to pay taxes on billboards it runs on MBTA property in Boston

The Supreme Judicial Court ruled today that the company that sells space on billboards on MBTA property in Boston has to pay city property taxes on the structures.

Outfront Media argued it was exempt from city property taxes because the MBTA land on which the billboards sit is exempt from the taxes and that it was providing a service to the MBTA - in addition to paying the T rent, it had to set aside a percentage of the ad time for MBTA messages.

But the state's highest court concluded that, ultimately, the company was "using" - a key word in the state law on related to property-tax exemptions - MBTA property to make a profit beyond what it was earning from providing a service to the T. And that means the billboards - and the telecommunications equipment attached to some of them - become taxable, just like stores or other profit-making enterprises run in space owned by non-profit concerns.

The ruling specifically means Outfront will not get an abatement it sought on the $198,257.49 it paid Boston in property taxes for the 2020-2021 fiscal year.

The court contrasted what Outfront was doing with a janitorial company hired to keep T stations clean:

The janitor who cleans an MBTA station or the plumber who replaces a leaky pipe on MBTA property would not use MBTA property in connection with a business conducted for profit as those terms are properly understood under § 24 [the state law at issue]. Their degree of control over the property is too limited. To perform the services requested of them, their physical control over the property is confined to the time and space needed to perform the services requested. Their control over the revenues that may be generated by the property are also more limited. They are not empowered to serve their own clients and retain the profits from those third-party transactions. The revenues they receive from the MBTA are also defined by the service contract. Contrast this with the owners of a for-profit coffee shop or restaurant operating inside an MBTA station. They enjoy a much greater degree of physical control over the property, including the design and operation of their business. They also charge for their own third-party customers, and do not just receive revenues from the MBTA. Finally, they retain the revenues that may be generated from their right to use the property for their for-profit business. If they are exempt from taxation, they also have an advantage over a similar coffee shop or restaurant operating on private property and subject to taxation. A service provider is not similarly advantaged.

Applying these principles to the instant case, Outfront is not just providing services to the MBTA, it is using the MBTA's property to conduct a business for profit. Outfront's control over the property and the revenues that may be generated by the property reflect this distinction. Its exclusive physical control over the property is significantly greater than a service provider, such as a janitorial or maintenance company. Outfront also conducts a for-profit business in which it charges third-party customers and retains the profits from such transactions, again reflecting its control of not only the physical property but also the revenues that may be generated from the property, thereby exercising a more comprehensive level of control of the property akin to an owner.

More specifically, the agreement gives Outfront the exclusive right to advertise on existing signs and to advertise on new signs designed and installed by Outfront on MBTA property, and to contract with the private parties seeking to advertise on those signs. Outfront also has the exclusive right to install, license, operate, and maintain telecommunications equipment on the MBTA signs, and to contract with those telecommunication companies. Further, Outfront is not paid a flat fee for the services provided. Rather, Outfront is compensated through revenue that it generates from the MBTA signs and telecommunications equipment installed on the signs, and may reap significant, uncapped profits from such operations. Outfront is not merely present on MBTA property to perform services for the MBTA. Rather, it is using the MBTA signs to conduct a for-profit business.

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PDF icon Complete ruling139.16 KB


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Obviously, no consequences for slow or late payments.

Voting closed 11

And then sought an abatement, so, no late payments involved.

Voting closed 33

It's hard to disagree with the State Supreme Court's logic on this one. But that's what lawyers are for.

Voting closed 16