Towns see ‘significant victory’ in tax decision

Supreme Court rules that municipalities have right to appraise utility infrastructure


The state Supreme Court on Thursday affirmed the right of the cities and towns to appraise utilities within their borders, rejecting arguments by Eversource and the N.H. Electric Cooperative that the appraisals are not a fair indication of their value.
The decision comes after extended litigation that began with an appeal of orders by the Bureau of Tax and Land Appeals in 2015 that rejected the utilities’ requests for tax abatements.
Telephone and electric companies seeking tax abatements from the towns have argued that many of the assessments have overvalued their property. They favor a statewide appraisal that would keep the assessed values consistent, regardless of which town the facilities might lie within.
More than 60 communities were involved in a joint municipal lawsuit to settle the argument, including Gilford which has been setting money aside in case of an adverse court decision.
“To me, the law was crystal clear, anyway,” said Gilford Town Administrator Scott Dunn.
RSA 72:9 requires that utility properties must “be taxed in each town according to the value of that part lying within its limits.”
In separate appeals, Eversource and the N.H. Electric Cooperative argued that the Department of Revenue Administration’s methods of assessment for the statewide utility property tax are a better way to determine the value.
The Bureau of Tax and Land Appeals found that method did not consider the market value of Eversource’s property in individual towns, and the Supreme Court upheld that assessment, saying the DRA’s approach was inconsistent with RSA 72:9.
In advising Alexandria selectmen to reject the utilities’ requests for abatements earlier this year, appraiser Gary Roberge of Avitar Associates of New England, Inc., wrote, “I do not rely on DRA’s opinion of value for many reasons. The most glaring reason why I recommend you do not accept the DRA opinion of value is that it does not report an opinion of market value, but rather an opinion of regulated value while the law clearly requires an estimate of fair market value. Just as important, it does not assess the property physically located in the town, but rather allocates a value to the town with no regard to the actual property or the age and condition of that property in town.”
Belmont Town Administrator Jeanne Beaudin said the utilities’ rights of way through Belmont “don’t have a tremendous amount of value,” so the town had not been setting aside more than it traditionally places into the overlay — funds used to cover veterans’ and other exemptions, as well as property abatements.
The town of Sandwich also was a party to the lawsuit, and selectman Willard “Bud” Martin said the court decision will help the town’s finances.
“We’re conservative in our planning,” he said, “and this justifies taking the time and expense of the legal fight.”
Like Belmont, Sandwich uses its regular reserves — 6 to 7 percent of the town’s annual budget — to accommodate any abatement or exemption that must be given. He said sharing legal counsel with other towns led to “quite modest” expenses.
New Hampton Town Administrator Barbara Lucas said, “We’ve been pretty confident the case would come out on the town’s side,” adding that the town has a healthy fund balance but still is quite pleased at the outcome.
With the Ayers Island dam as part of Eversource’s holdings in New Hampton and Bristol, those towns have significant tax income from the electric utility, and Lucas said the town has set aside about $250,000 to cover potential utility abatements as well as other pending tax appeals.
Durham Town Manager Todd Selig issued a statement, saying, “Municipalities have been steadfast in the appropriateness of their local utility appraisals as doing no more and no less than assigning a fair market value to utility properties within their jurisdictions on behalf of local taxpayers. This decision affirms our approach.
"... It is unfortunate we have had to expend tens of thousands of dollars collectively to prove an argument we all knew to be correct in the first place,” Selig said.
Eversource’s media spokesman, Martin Murray, said, “Eversource always seeks to pay our fair share of taxes and is the largest payer of property taxes in the state of New Hampshire. Ultimately, it is our customers who pay those costs, so we seek to ensure they are fair and reasonable.
“On behalf of our customers, and as a regulated utility, we have a duty to dispute those valuations made by communities that are extreme outliers compared to the New Hampshire Department of Revenue’s assessment of the value of our assets.”
He continued, “We remain concerned at the situation that the Supreme Court today described as ‘troubling’ — the wide variance in some local assessments compared to the Department of Revenue Administration’s assessments. Every taxpayer in New Hampshire has the right to appeal assessments they believe are incorrect and we will retain, on behalf of our customers, that right.”
Lucas expressed concern about House Bill 324, which utility companies were heavily lobbying for, that would require the use of the DRA’s appraisal method for local property tax purposes. The House retained that bill, and Lucas said, “We’ll be anxious to see if the legislature picks up on (that) piece of legislation.”
The N.H. Municipal Association is reviewing the Supreme Court decisions, but stated, “it is clear that they represent significant victories for the municipalities and vindication of their valuation methods.”

Editor's note: This story has been updated to correct that Belmont was not a party to the cases decided by the state Supreme Court. When contacted about the ruling for an article appearing in Saturday’s Laconia Daily Sun, Town Administrator Jeanne Beaudin had not yet read the decision and thought it referred to a separate case involving Fairpoint and right-of-way taxation. Her comments were based on that case, which is still pending.