Case Title: Great Bay Hydro Corp. v. Town of Derby

Citation: 2007 VT 10

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2007-01-25T00:00:00Z

Document:
Great Bay Hydro Corp. v. Town of Derby (2005-504)

2007 VT 10

[Filed 25-Jan-2006]
      
                                 ENTRY ORDER

                                 2007 VT 10

                      SUPREME COURT DOCKET NO. 2005-504

                            SEPTEMBER TERM, 2006


  Great Bay Hydro Corporation          }         APPEALED FROM:
                                       }
      v.                               }
                                       }         Property Valuation and 
                                       }         Review Division
                                       }
  Town of Derby                        }
                                       }         DOCKET NO. PVR 2004-35, 
                                       }                36, 37, 70


             In the above-entitled cause, the Clerk will enter:

       ¶  1.  Great Bay Hydro Corporation appeals from a decision of the
  state appraiser setting the listed value of its property used as a
  hydroelectric generating plant in Orleans County.  Great Bay contends the
  state appraiser departed from settled law in rejecting a recent sale of the
  property as conclusive evidence of its fair market value for tax assessment
  purposes.  We affirm.  

       ¶  2.  The property in question is part of the Clyde River
  Hydroelectric Project.  The project comprises several parcels, including a
  dam, impoundment area, and three hydroelectric turbines located in the Town
  of Derby and the City of Newport.  The Derby parcels amount to more than
  500 acres. The Newport parcel is over forty-six acres. For many years,
  Citizens Utilities Company, the predecessor to Citizens Communications
  Company (Citizens), owned and operated the project under a license from the
  Federal Energy Regulatory Commission and a Water Quality Certification
  permit from the State of Vermont.  The current federal license and State
  permit include a number of environmental-protection measures which,
  according to Great Bay, have reduced the project's annual power output and
  increased its generating costs.

       ¶  3.  On April 1, 2004, Citizens sold the project to Great Bay for
  $10.  The purchase and sale agreement required Citizens to indemnify Great
  Bay up to $3.5 million, over a period of three years from the date of
  closing, for costs incurred to bring the project into compliance with the
  conditions contained in the state and federal permits.  Notwithstanding the
  nominal purchase price,  Great Bay paid Vermont property transfer tax in
  the amount of $41,274.45 in connection with the transaction based on an
  expressed value of $3,301,956.  Assessors in the City and the Town set the
  2004 listed value of the properties involved at $2,504,300 and $1,193,200,
  respectively, and these values were affirmed by their respective Boards of
  Civil Authority.  Great Bay appealed both rulings to the state appraiser,
  who consolidated the appeals, held an evidentiary hearing in May 2005, and
  issued a written decision in June 2005.
   
       ¶  4.  The state appraiser rejected Great Bay's claim that the sale
  price of $10 necessarily established the property's fair market value,
  finding in this regard that the sale was not an arms-length transaction. 
  The appraiser based this finding on several considerations, including the
  fact that the property was privately offered to a limited number of buyers
  rather than exposed on the open market.  The appraiser also noted that the
  sale to Great Bay was part of an overall plan by Citizens  to divest all
  electrical power assets and that the parcels here in question were, in
  fact, its last electrical assets to be liquidated.  After reviewing
  alternative appraisals and methodologies submitted by the parties, the
  state appraiser determined that "[t]he income approach provides the most
  reliable estimate of Fair Market Value for the Subject property," and
  therefore, set the listed value of the property in the Town at $1,092,600
  and in the City at $1,721,700 (after adjusting for local equalization
  ratios).  This appeal by Great Bay followed. (FN1)      

       ¶  5.  We note at the outset the deferential character of our
  review.  We assess decisions of the state appraiser to ensure that they
  "are supported by findings rationally drawn from the evidence and are based
  on a correct interpretation of the law."  Barrett v. Town of Warren, 2005
  VT 107, ¶ 5, 179 Vt. 134,