Coos: Lancaster Applies To County's Utility Value Defense Fund
As utilities appeal their assessments across New Hampshire -- increasing residential property tax rates if they succeed -- Coos County is fighting back with a utility valuation defense fund.
To date, Lancaster, requesting $15,000 from the fund, is one of three Coos towns to apply for financial support in its ongoing fight with several utilities, chief among them FairPoint Communications and Public Service of New Hampshire (PSNH), said Lancaster Town Manager Ed Samson.
Since the appeals began several years ago, town officials in both Coos and Grafton counties have said the utilities are strategically challenging assessments in those towns that have small legal budgets and lack the money to fight them.
Of the Coos defense fund, Samson said, "I think it's a great opportunity for towns to commit to something long term and save all of these legal expenses."
During the Coos County Commission's May meeting, the commissioners voted to send a letter to all of Coos's municipalities to let them know that money from the fund, created in 2013 and unused until now, is available.
There is now $80,000 in the fund, though that figure is expected to soon be down to about $40,000, said county finance director Carrie Klebe.
During last week's commission meeting, commission chairman Tom Brady, citing an email from state Rep. Robert Theberge, D-Berlin, said the county delegation might consider additional funding if the current level of appropriated funds proves insufficient.
In early 2014, a five-year agreement was negotiated between the town of Lancaster and Portland Pipeline that is consistent with the previous year's assessment figures. As a result, that utility did not appeal, said Samson.
But some of the other utilities, such as PSNH, are in their fourth tax year of appeal, he said.
The appeals are often cyclical.
"It's a process that goes on for years and ultimately there is some settlement, usually somewhere in the middle," said Samson. "But the town of Lancaster is currently spending about $55,000 a year, and we haven't even gone to trial yet."
Some utilities, like PSNH, are trying to use the assessed utility values from the New Hampshire Department of Revenue Administration, which employs the state's utility property tax statute that sets the utilities' contribution to the state education tax.
Towns, however, argue that formula is used for one purpose only, does not reflect a true utility property value and the utilities are misusing it in an attempt to drive their assessments below fair market value.
"The utilities hang their hats on the DRA's assessed values, which are significantly lower than other assessors," said Samson. "They've proven in other court hearings the DRA values are not valid. I'm assuming the same is going to happen again."
To date, at the New Hampshire Board of Tax and Land Appeals (BTLA), PSNH has a total of 87 appeals against 56 of New Hampshire's 234 municipalities, almost all of them small towns.
In Lancaster for the 2011 tax year, PSNH is seeking to cut its assessment from $7.38 million to $3 million, according to that appeal.
In Whitefield, for tax year 2011, PSNH seeks to reduce its taxable real estate from $12.9 million to $5 million, according to that appeal.
In Dalton for 2011, PSNH seeks to cut a $3.7 million assessment to $1.2 million.
In order to protect the towns, Samson said he feels the New Hampshire legislature needs to intervene and determine the true market values.
"Wires are wires and pole are poles," he said. "They should mandate the DRA to go with a realistic value."
On Monday, representatives for PSNH declined to say if it they feel the DRA values represent a true market value of PSNH properties.
"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," said PSNH spokesman Mike Skelton.
A community's size or location is not part of the criteria in determining which assessments will be challenged, said Skelton, and PSNH is consistent in its approach to ensuring it pays its fair share of taxes on behalf of its customers.
Samson called the appeals by FairPoint, which is suing more than 100 municipalities in superior court, "new waters."
FairPoint and other telecommunications companies with telephone poles had been given a long-term agreement by the state that prohibited municipalities from taxing their poles and conduits.
That agreement recently expired, however, and municipalities decided the poles and conduits were taxable and began taxing them, said Samson. "Somewhere, we will come up with a realistic number for them," he said.
On Monday, FairPoint spokesman Jeff Nevins said when the legislation to tax poles was proposed, FairPoint and a coalition of telecommunications providers challenged it, asserting that FairPoint and other telecommunications companies were already taxed equitably.
During the legislative hearings, FairPoint cautioned that without clearly defined methodology to determine pole and conduit valuations, there would be huge variations in the municipal tax assessments and telecommunications companies would be forced to challenge the assessments in court, he said.
"That warning quickly became a reality as FairPoint started receiving dozens of new tax bills with a 200-percent swing in some valuation," said Nevins. "The company is challenging those valuations, requesting abatements and calling on towns to review their assessment practices."
During last week's commission meeting, county treasurer Fred King asked why the county is not suing on behalf of all its towns.
Commission vice-chairman Paul Grenier said because the DRA is going through the BTLA by each community, the communities cannot unite as one. Therefore a class action lawsuit is not an option.
In recent years, in addition to PSNH and FairPoint, North Country towns have seen utility property appeals by TDS Telecom, Dunbarton Telephone Co., Granite State Telephone Co., Great-Lakes Hydro, Northern Utilities, TransCanada, Unitil, EnergyNorth, New England Hydro Transmission, Granite State Gas Transmission Co., and New England Electric Transmission Corp.
Some appeals have been resolved and others remain ongoing.