Monday, February 10, 2014

How Much Property Tax Would Northern Pass Actually Pay?

PSNH is currently trying to slash its utility assessments by 50% or more in 56 NH municipalities, mostly small towns, thereby reducing the property taxes it must pay and forcing residents to pay higher property taxes to make up the shortfall. More appeals are expected for the 2013 tax year.

Northern Pass claims it would contribute "an estimated $28 million in new local, state, and county tax revenues." Would Northern Pass also appeal its assessments and try to slash the property taxes it pays to NH towns? 

Utilities Fight Property Tax Bills Across State
Robert Blechl
Staff Writer
Caledonian Record

North Country towns swamped with utility property appeals face a long fight that will decide whether big utilities can slash their taxes in half or more and leave residential taxpayers making up the millions lost through higher property taxes.

One of those cases, filed at Grafton Superior Court by the New Hampshire Electric Cooperative (NHEC) against Haverhill and other Grafton towns, had been scheduled for trial in February, but has now been continued to June.

As of Friday, Public Service of New Hampshire (PSNH), represented by the same attorney as NHEC, is suing 24 percent of New Hampshire's municipalities through appeals that have been continued to 2015, when they are expected to be heard at the New Hampshire Board of Tax and Land Appeals.

In their appeals, PSNH and NHEC seek to use the Department of Revenue Administration's 83-F appraisal reports, the state's utility property tax statute that sets the utilities' contribution to the state education tax.

Towns, however, argue the 83-F formula is used for one purpose only, does not represent a true property value and the utilities are misusing it in an attempt to drive their assessments below fair market value.

To date, PSNH has a total of 87 appeals against 56 of New Hampshire's 234 municipalities, most of them small towns, according to the BTLA list.

Those appeals, most for the 2011 and 2012 tax years, include the towns of Bath, Dalton, Gorham, Haverhill, Lancaster, Landaff, Lincoln, Littleton, Plymouth, Randolph, Stark, Stewartstown and Whitefield.

A more recent appeal thrown into the mix is Littleton, which has a tax base of $759 million.

In Littleton, PSNH, for tax year 2012, seeks to cut its assessment in half, from $21.9 million to $11.3 million, according to its appeal.

"Half of a $21 million assessment in a town like Littleton would be a devastating burden and real challenge to taxpayers," said Selectman Marghie Seymour. "Here we are working as hard as we can to up our valuation by a million here and a million there and they are trying to take away $11 million."

As a selectman, Seymour said she doesn't begrudge anyone their right to challenge whether they feel their assessment is valid or not.

"But more and more often, it feels like the utilities are ganging up on the towns that don't have the money to fight," she said. "On the one hand, they say we will see all these tax benefits from Northern Pass to North Country communities and on the other hand they are participating in what appears to be a concerted effort to give as little to the towns as they possibly can."

Littleton Town Manager Fred Moody said, "Our plan is to work with the other communities in the state. Certainly, the situation in Littleton is not much different."

In Whitefield, for tax year 2011, PSNH seeks to slash its taxable real estate by more than half, from $12.9 million to $5 million, according to that appeal.

In Haverhill for 2012, it seeks to reduce its assessment from $4.6 million to $2.8 million.

In Dalton for 2011, PSNH seeks to reduce a $3.7 million assessment to $1.2 million.

In Lancaster for 2011, PSNH seeks to cut its assessment from $7.38 million to $3 million.

In terms of percentage, Landaff, with a tax base of $51 million, would see one of the biggest reductions if PSNH is successful in reducing its 2011 assessment from $933,202 to $271,588.

BTLA representatives said more appeals are expected for the 2013 tax year.

On Friday, PSNH spokesman Martin Murray, said, "At PSNH, we always seek to pay our fair share of taxes. 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 local valuations that are extreme outliers compared to the New Hampshire Department of Revenue's assessment of the value of our assets."

PSNH pays its tax bills upon receipt, and if it disagree with the assessment, the company includes a letter stating it protests the assessment, he said.

"While cases like this may ultimately be considered by the state, we typically first participate with the town in a period of mediation," said Murray. "It is our hope that the issue will be settled through that process and found to be acceptable to all."

Murray declined to answer if PSNH believes the 83-F report represents the true market value of the company's properties and if PSNH customers would see reduced rates if the appeals are successful.

During an October Littleton selectmen's meeting, former state Rep. Brien Ward asked selectmen to monitor the 83-F appeals and their potential impact on the town.

"When statewide property tax passed in 1999, it was agreed the utilities should pay their fair share," said Ward. "But they got legislation in that heavily discounted the value. It wasn't market oriented, it wasn't income oriented. They are now trying to take what they got as a concession in 1999 and run it statewide so that becomes the standard."

But the intent of the legislation is clear, said Ward, who believes the utilities have an uphill battle.

In addition to superior court, NHEC has appeals before the BTLA, including one against Colebrook.

In its superior court case against Haverhill, NHEC, for the 2010 through 2012 tax years, seeks to reduce its assessments by two-thirds.

In those tax years, NHEC's aggregate assessment in Haverhill was $2.167 million, $2.272 million and $2.4 million, according to the company's tax abatement petition.

Based on the DRA report, however, NHEC argues the market value of its taxable real estate in Haverhill was $663,141 in 2010, $701,127 in 2011, and $817,369 in 2012.

Taxation is supposed to be fair and equitable and Haverhill's system is fair and equitable, while the system the DRA uses discounts the utility properties and is not, said Haverhill Town Manager Glenn English.

"We're just trying to protect our tax base," said English. "To the extent they are successful, it will raise the burden on everybody else."