Section 20. The operation and maintenance of the projects by a municipality acting by and through an authority will constitute the performance of essential governmental functions, and an authority or municipality shall not be required to pay any taxes or assessments upon any project constructed or any property acquired or used by either under the provisions of this chapter. Income derived therefrom by such authority or municipality shall not be subject to taxation by the commonwealth. Bonds issued under this chapter, and any income derived therefrom, including any sale, exchange or transfer of such bonds, shall at all times be free from taxation.

Land and buildings of a municipality or authority shall, if leased for any activity or transaction entered into by the lessee for financial profit or gain, whether or not to an industrial occupant, be taxed by the city or town in which such land and buildings may be situated to the lessees thereof respectively, in the same manner as such land and buildings would be taxed to such lessees if they were owners thereof, except as follows:

(a) the payment of the tax shall not be enforced by any lien upon or sale of such land or buildings, but for the purpose of enforcing the payment of such taxes by such lessees to the city or town in which such land or buildings are situated, a sale of the leasehold interest therein may be made by the collector of the city or town in the manner provided by law for selling real estate for the nonpayment of real estate taxes;

(b) real estate acquired by a municipality and leased for any activity or transaction described above to a corporation or group of corporations operating under chapter one hundred and twenty-one A shall be taxed as provided therein and not otherwise.

Tangible personal property of a municipality or authority shall, if leased for any activity or transaction entered into by the lessee for financial profit or gain, whether or not to an industrial occupant, be subject to taxation under chapter fifty-nine and be taxed by the city or town in which such property may be situated to the lessee thereof in the same manner and to the same extent as such property would be taxed to such lessee if such lessee were the owner thereof.

If such lessee is subject to the excise levied under the provisions of sections thirty to fifty-one, inclusive, of chapter sixty-three, such tangible personal property shall be treated as though it were owned by such lessee for the purposes of such excise, and it shall be valued at eight times its annual rental rate, unless and to the extent that such property is treated by the lessee as owned by it for federal income tax purposes, in which case its value shall be its adjusted basis, as defined in the applicable provisions of the federal Internal Revenue Code, as amended and in effect for such year. All tangible property, real or personal, so leased shall be considered tangible property owned or rented and used in the commonwealth by such lessee for the purposes of section thirty-eight of chapter sixty-three.

If, and to the extent that, the governing body or bodies and the board or boards of assessors approve, a lease meeting the requirements of section twelve may as to improvements on or to real estate constituting a shipyard, a substantial portion of which is found by the state industrial finance board to be devoted to federal government contract work, specify which facilities are to be treated as real estate and which are to be treated as personal property for tax purposes, and such classification shall be conclusive during the term of the lease.