Monday, June 6, 2016

Small North Country Towns In Crux Of State Tax Fight With Big Implications

Small North Country Towns In Crux Of State Tax Fight With Big Implications              

Robert Blechl
Caledonian Record
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.