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Appeal o Public Service Company of New Hampshire

Supreme Court of New Hampshire

June 2, 2017

APPEAL OF PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE D/B/A EVERSOURCE ENERGY (New Hampshire Board of Tax and Land Appeals)

          Argued: January 12, 2017

         Board of Tax and Land Appeals

          Sulloway & Hollis, P.L.L.C., of Concord (Margaret H. Nelson and Derek D. Lick on the brief, and Ms. Nelson orally), for the petitioner, Public Service Company of New Hampshire d/b/a Eversource Energy.

          Donahue, Tucker & Ciandella, PLLC, of Meredith (Christopher L. Boldt and Eric A. Maher on the joint brief, and Mr. Boldt orally), for respondents Town of Bennington, Town of Chester, Town of Dalton, Town of Hampstead, Town of Haverhill, Town of Hinsdale, Town of Hopkinton, Town of Lancaster, Town of Lincoln, Town of Madison, Town of Marlborough, Town of Newport, Town of Pelham, Town of Plymouth, Town of Raymond, Town of Springfield, Town of Stratford, Town of Unity, Town of Washington, and Town of Whitefield.

          Upton & Hatfield, of Concord (Barton L. Mayer on the joint brief), for respondents Town of Antrim, Town of East Kingston, Town of Francestown, Town of Gorham, Town of Greenville, Town of Henniker, Town of New Ipswich, Town of Northfield, Town of South Hampton, Town of Stark, Town of Stewartstown, Town of Stoddard, Town of Warner, and Town of Wilmot.

          Mitchell Municipal Group, P.A., of Laconia (Judith E. Whitelaw and Walter L. Mitchell on the joint brief), for respondents Town of Andover, Town of Bridgewater, Town of Croydon, Town of Danville, Town of Dunbarton, Town of Durham, Town of Fremont, Town of Littleton, Town of New Hampton, Town of Pembroke, Town of Randolph, Town of Sandwich, Town of Sullivan, and Town of Sunapee.

          Gardner, Fulton, & Waugh, PLLC, of Lebanon (Shawn M. Tanguay on the joint brief), for respondents Town of Bath, Town of Bradford, Town of Bristol, Town of Landaff, and Town of Milan.

          Town of Hollis, self-represented respondent, filed no brief.

          Bradley & Faulkner, P.C., of Keene (Gary J. Kinyon), for respondent Town of Nelson, filed no brief.

          Joseph A. Foster, attorney general (Laura E. B. Lombardi, senior assistant attorney general, on the brief), for the New Hampshire Department of Revenue Administration, as amicus curiae.

          Pierce Atwood, LLP, of Portland, Maine (Jonathan A. Block on the brief), for Unitil Energy Systems, Inc., Northern Utilities, Inc., and Granite State Gas Transmission, Inc., as amici curiae.

          Judy A. Silva, Cordell A. Johnston, Stephen C. Buckley, and Margaret M.L. Byrnes, of Concord, for New Hampshire Municipal Association, by brief, as amicus curiae.

          LYNN, J.

         The petitioner, Public Service Company of New Hampshire d/b/a Eversource Energy (PSNH), appeals an order of the New Hampshire Board of Tax and Land Appeals (BTLA) denying 77 of PSNH's 86 individual tax abatement appeals on its property located in 31 of the respondent municipalities for tax year 2011 and 55 of the respondent municipalities for tax year 2012. We affirm.

         I

         The relevant facts follow. PSNH is a for-profit corporation that provides electricity generation, transmission, and distribution services in approximately 210 communities and to 490, 000 homes and businesses. PSNH owns nine hydroelectric facilities and three fossil fuel generating plants. The New Hampshire Public Utilities Commission (PUC) has granted PSNH exclusive franchises to provide certain electricity services within its territory. The PUC regulates PSNH's electricity rates. The parties' experts agree that PSNH is professionally managed and that its property is fully operational, in good condition, and is well maintained.

         A municipality's selectmen are required to appraise the value of the property located within the municipality, including utility property. See RSA 75:1 (Supp. 2016); RSA 72:8 (2012); see also RSA 72:9 (2012) (stating that utility property that is situated in more than one town "shall be taxed in each town according to the value of that part lying within its limits"). Separately, the New Hampshire Department of Revenue Administration (DRA) appraises PSNH's property at the state level for purposes of the RSA chapter 83-F utility tax. See RSA ch. 83-F (2012 & Supp. 2016).

         PSNH filed tax abatement appeals to the BTLA for 86 municipal assessments of PSNH's property that occurred between 2011 and 2012. The BTLA held a consolidated hearing over eight days in February 2015 regarding PSNH's tax abatement appeals. During the hearing, PSNH presented expert witness testimony and an appraisal of PSNH's property from Thomas K. Tegarden, owner of Tegarden & Associates, Inc. PSNH also presented testimony from Scott E. Dickman, a New Hampshire certified general appraiser employed by the DRA in its Property Appraisal Division as a utility appraiser. Additionally, PSNH submitted the DRA appraisals that Dickman had prepared for the purpose of the RSA chapter 83-F state utility property tax.

         Both Tegarden and Dickman used the "unit method" to appraise PSNH's property. Under the unit method, an appraiser first values all of a utility's property as a whole and then allocates that whole unit value to the individual municipalities where the utility's property is located. To derive their unit values, Tegarden and Dickman primarily used two approaches: a cost approach, which estimated the net book value (NBV) of PSNH's property by calculating the original cost less book depreciation (OCLBD) of PSNH's property; and an income approach, which estimated the value of PSNH's property by capitalizing the company's net operating income. Additionally, at PSNH's request, the BTLA took judicial notice of the DRA's equalization process.

         The municipalities presented expert testimony and appraisals from several certified New Hampshire assessors: Gary J. Roberge, CEO of Avitar Associates of New England, Inc.; Frederick H. Smith, of Brett S. Purvis & Associates; Wil Corcoran and Monica Hurley, of Corcoran Consulting Associates, Inc.; and George E. Sansoucy, of George E. Sansoucy, PE, LLC. Roberge estimated the value of PSNH's property in the municipalities for which he was engaged using a cost approach that calculated the reproduction cost new less depreciation (RCNLD) of the property. To estimate the value of PSNH's property in the municipalities for which he was engaged, Sansoucy reconciled the results of four approaches: a sales comparison approach; an RCNLD cost approach; an income approach that assumed a sale to a privately-owned, regulated utility; and a second income approach that assumed a sale to a publicly-owned utility. Sansoucy also prepared an appraisal report for the municipality that had originally been assessed by Corcoran. Smith appraised only the value of PSNH's land while relying upon the DRA's assessment of PSNH's other property for each municipality for which he was engaged. After the municipalities presented their experts, PSNH presented rebuttal testimony from Tegarden and from Dr. Hal Heaton, a professor of finance at Brigham Young University. Heaton did not provide an opinion of PSNH's market value.

         In July 2015, the BTLA issued a thirty-eight page order granting nine of PSNH's abatement appeals and denying the remainder. For the appeals that it granted, the BTLA found that the municipal assessors acknowledged a material degree of overassessment of the property at issue. Regarding PSNH's other appeals, the BTLA found that the Tegarden appraisals and DRA appraisals did not result in a credible opinion of market value and ruled that PSNH had not met its burden of proving that the local assessments were disproportional. Additionally, the BTLA reviewed the criticisms leveled at the assessment methodologies used by the municipal assessors, as well as the municipalities' responses to those criticisms, but it ruled that it need not address those points because challenges based on assessment methodology do not, and cannot, carry PSNH's burden of proving disproportionality.

         PSNH moved for rehearing, which the BTLA denied by written order in September 2015. This appeal followed.

         II

         Our standard for reviewing BTLA decisions is set forth by statute. See RSA 541:13 (2007); RSA 71-B:12 (2012) (providing that BTLA decisions may be appealed in accordance with RSA chapter 541 (2007)). The BTLA's findings of fact are deemed prima facie lawful and reasonable. See RSA 541:13; Appeal of Town of Charlestown, 166 N.H. 498, 499 (2014). "To prevail, the [appellant] must show by a preponderance of the evidence that the BTLA's decision was clearly unreasonable or unlawful." Town of Charlestown, 166 N.H. at 499; see also RSA 541:13. "We will not set aside or vacate a BTLA decision except for errors of law, unless we are satisfied, by a clear preponderance of the ...


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