Small North Country Towns In Crux Of State Tax Fight With Big Implications
June 6, 2016
Municipalities across N.H., including many in the North Country, are finding themselves at the center of a tax dispute that has put state agencies at odds and could impact how utility property in the state is assessed in the future.
At stake for small towns are millions of dollars in tax revenue.
On Wednesday, an attorney representing several of the towns, including Littleton, wrote the N.H. Supreme Court with concerns about the N.H. attorney general’s intent to file an amicus, or friend of the court, brief for what she said would be on behalf of the N.H. Department of Revenue Administration and in support of the tax abatement appeals of the two utilities against scores of municipalities.
In March, attorneys for towns being sued by Eversource Energy and the N.H. Electric Cooperative learned the attorney general’s office would be getting involved in the case that went to the N.H. Supreme Court after the two utilities appealed a July 2015 decision by the N.H. Board of Tax and Land Appeals that casts doubt on their appraisal methodology.
For their local utility property assessments, Eversource and NHEC seek to use the DRA’s 83-F formula, the unit method of valuation that sets the utilities’ share of the statewide property tax, specifically their contribution to the state education tax.
Through the DRA formula, the two utilities seek to cut their local utility assessments, and property taxes, by one-half to two-thirds.
The municipalities, however, argue the DRA method is for a different tax and does not reflect the true market value of the utility properties, but Eversource and NHEC are still trying to use it to drive their assessments below fair market value.
In its decision, the BTLA agreed with the towns and concluded the appraisals provided by NHEC and Eversource - that include the DRA utility appraisals - do “not result in credible opinions of market value.”
In her Wednesday motion to the state’s high court, Whitelaw argues the DRA should not be allowed to use a N.H. Supreme Court rule exception to file a brief in the case to respond to the BTLA decision regarding DRA procedures or address its “notion of the potential political impact the decision may have on the DRA’s own statutory responsibilities and/or the municipalities’ decisions to utilize the DRA reports for local assessing purposes.”
Whitelaw said the DRA’s apparent interest is to counter the BTLA decision “in an effort to rehabilitate itself and its employee in the eyes of the public; this is not an appropriate use of an amicus brief and is a waste of the court’s and the parties’ time and resources.”
DRA utility appraiser Scott Dickman has testified against the towns’ direct interest in the litigation, she said, and “the DRA is now deliberately inserting itself into the appeal for the stated reason that the BTLA’s decision was less than flattering of Mr. Dickman’s testimony and the DRA’s procedures.”
The DRA is statutorily charged with establishing equalization ratios used for both county and local taxation purposes, and the agency provides assessing assistance to municipalities and works with them to set their tax rates.
Whitelaw said, “The Legislature did not intend for the relationship between the municipalities and the DRA to be adversarial.”
About one-third of N.H. municipalities use the DRA’s utility valuation for local property assessments instead of retaining their own appraiser.
While the case began as a tax abatement fight between towns and the two utilities, DRA representatives have since expressed concerns about the impact a court decision could have on the validity of the DRA equalization process for the roughly 30 to 35 percent of N.H. municipalities that use the DRA method.
In March, Whitelaw wrote N.H. Attorney General Joseph Foster to express concerns that the NHAG involvement is tantamount to the NHAG joining the utilities’ efforts to overturn the BTLA’s decisions in 109 tax abatement appeals, many first filed in 2011 and 2012 and each year thereafter.
For the past four years, many towns, some having spent tens of thousands of dollars fighting the lawsuits and hiring appraisal experts, argue the case is about tax fairness.
Utility properties in many small towns make up a large chunk of the towns’ tax base, and to the extent the utilities are successful in their tax abatement appeals, it will increase the taxes of other taxpayers. In some smaller towns, such as Landaff, utility property is essentially the only commercial property.
In Littleton alone, Eversource is seeking to reduce its total assessment of about $22 million to $11 million.
Eversource is suing about one-third of N.H.’s municipalities, most small towns and many in the North Country, including Littleton, Bath, Haverhill, Lancaster, Dalton, Northumberland, Whitefield, Landaff, Stark, Stratford, and Stewartstown.
NHEC’s tax abatement appeals, filed at both the BTLA and superior court, are against towns that include Bath, Colebrook, Haverhill, Landaff, Littleton, and Monroe.
Stephan Hamilton, director of the DRA’s Municipal and Property Division, has declined to talk about the case as has NHAG Assistant Attorney General Laura Lombardi, who is representing the DRA.
Oral arguments before the N.H. Supreme Court could be heard in early 2017.