10/16/2014
North Country: Towns Incurring Big Expense Fighting Big Utilities
Robert Blechl
Staff Writer
Caledonian Record
Legal expenses in the tens of thousands of dollars are mounting for small towns across the North Country in their fight against big utilities, whose tax appeal lawsuits, some in their fourth year, are now dragging into 2015.
"It's an ongoing situation and is not unique to Haverhill," Haverhill Town Manager Glenn English said this week. "Their strategy is to outspend us, but the towns have wisely banded together."
Towns, some sharing legal expenses, argue the N.H. Department of Revenue Administration's 83-F formula that sets the utilities' contribution to the state education tax does not reflect a true market value but utilities such as the New Hampshire Electric Cooperative (NHEC) and Public Service of New Hampshire (PSNH) are still trying to use it in an attempt to drive their properties below fair market value.
The issue that involves a N.H. Supreme Court case and the state's formula on utility property assessment is a complicated one. If the utilities are successful, it could set a new legal precedent regarding valuation of their properties and could mean a spike in residential taxes as small towns adjust to make up the difference of millions of dollars in lost tax revenue.
In 2011 in Grafton Superior Court, NHEC filed tax abatement appeals against several Grafton towns, including Haverhill, where it seeks to slash by two-thirds several years of assessments averaging $2.3 million.
That case, after a status conference last week, has been continued into 2015.
In its fight against NHEC, Haverhill, since March 2012, has accumulated a total of $25,923 in legal fees and $36,954 in assessing fees, said English.
"We tried mediation in the summer, but that didn't work so it's going to trial," he said.
NHEC spokesman Seth Wheeler said, "NHEC has brought these appeals because it believes that its assessments in particular communities are well above the market value of its property and results in its members across the state being asked to pay more than their fair share of the tax burden in these communities."
Wheeler said NHEC seeks to pay its fair share of taxes and there is an ongoing effort to reach a fair agreement with a handful of towns.
NHEC is appealing assessments in both superior court and at the N.H. Board of Tax and Land Appeals (BTLA), and has filed tax appeals against 37 towns at the BTLA.
PSNH, sharing the same attorney as NHEC, is also trying its luck at the BTLA, where it has filed a total of 87 appeals against 56, or about 25 percent, of New Hampshire's 234 municipalities. Most are small towns and many are in the North Country.
The first batch of PSNH appeals at the BTLA are expected to be heard in January, and PSNH appeals for 2013 have also been filed, to be heard at a later date.
English said there are two methods a town can use for utility property assessment - the unit method employed by the DRA and the assessor method.
"I think our lawsuit has a lot to do with which method is going to continue," he said.
In 1994, in a superior court case called PSNH v. Bow, the N.H. Supreme Court affirmed a trial court's ruling that rejected the unit method in determining fair market value of PSNH property.
According to the high court, "The trial court found that 'the unit method as proposed by PSNH is neither reliable nor appropriate for purposes of ad valorem property taxation of regulated utility property' ... We sustain the rulings and findings of the trial court ..."
In an Aug. 20 order on the NHEC case, however, Grafton Superior Court Judge Lawrence MacLeod wrote, "The issue before this court is whether evidence regarding unit method valuation of NHEC property is even admissible at trial; not whether the unit method is the more reliable valuation method ..."
PSNH, seeking to use the unit method, has appealed against the North Country towns of Bath, Dalton, Gorham, Haverhill, Landaff, Lincoln, Littleton, Plymouth, Randolph, Stark, Stewartstown and Whitefield as well as Lancaster, which is currently spending about $55,000 annually fighting appeals by several utilities, with no case having yet gone to trial.
In Lancaster for the 2011 tax year, PSNH is seeking to cut its assessment from $7.38 million to $3 million.
In Littleton, PSNH, for tax year 2012, seeks to cut its assessment in half, from $21.9 million to $11.3 million.
In Whitefield, for tax year 2011, PSNH seeks to reduce its taxable real estate from $12.9 million to $5 million.
In Dalton for 2011, PSNH seeks to cut a $3.7 million assessment to $1.2 million.
PSNH has stated it has a duty to dispute those valuations made by communities that are "extreme outliers" compared to the DRA's assessment of the value of its assets, but has declined to provide the math it uses to determine what it considers an extreme outlier.
Meanwhile, more tax appeals are being filed, including another against Haverhill, which in September was notified of an appeal by New England Hydro Transmission.
Not all utilities that file appeals seek to use the DRA's unit method.
In recent years, North Country towns have seen utility property appeals - some resolved, others ongoing - by FairPoint Communications, TDS Telecom, Dunbarton Telephone Co., Granite State Telephone Co., Great-Lakes Hydro, Northern Utilities, TransCanada, Unitil, EnergyNorth, Granite State Gas Transmission Co., and New England Electric Transmission Corp.