Case Title: VT Electric Power v. Town of Cavendish

Citation: 

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 1991-12-01T00:00:00Z

Document:
NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
 that corrections may be made before this opinion goes to press.


                                 No. 91-003


 Vermont Electric Power Company, Inc.         Supreme Court

                                              On Appeal from
      v.                                      State Board of Appraisers

 Town of Cavendish                            December Term, 1991


 Elizabeth Koitto, Chair

 Thomas N. Wies, Rutland, for plaintiff-appellee

 Stephen C. Walke, Jr. and Ralph W. Howe III of Paterson & Walke, P.C.,
   Montpelier, for defendant-appellant

 Deborah L. Markowitz, Montpelier, for amicus curiae Vermont League of
   Cities & Towns


 PRESENT:  Allen, C.J., Gibson, Dooley and Morse, JJ.


      ALLEN, C.J.   The Town of Cavendish appeals from a decision by the
 State Board of Appraisers (Board) applying the Town's average equalization
 ratio to Vermont Electric Power Company (VELCO) property.  We affirm the
 decision and reject the Town's contention that VELCO's property should be
 listed at one hundred percent of fair market value.
      VELCO owns property in Cavendish consisting of land, high-voltage
 transmission lines, substations, poles, and related utility facilities.  In
 April of 1990, the Town's board of listers appraised and listed that pro-
 perty, not including the land, at $6,560,200.  Hearings before the local
 board of civil authority did not result in any change to either the
 appraised or listed value, and VELCO appealed to the State Board of
 Appraisers.  The Board, using the "Handy-Whitman/Iowa Curve" formula,
 established the fair market value of the subject property at $6,035,388, and
 neither party disputes that figure.  The instant case centers around the
 Board's application of the Town's average equalization ratio (AER) of 66.23
 percent to the fair market value, which resulted in a listed value of
 $3,997,237.
      The parties and the Board agree that, given the absence of sales
 transactions involving utility property, the proper appraisal method for the
 VELCO property required application of the formula.  This formula starts
 with the original cost of the property and then applies the Handy-Whitman
 index, which is updated regularly and adjusted for different regions of the
 country, to approximate replacement cost.  Depreciation is then calculated
 according to the Iowa Curve, which reflects the remaining life of utility
 property.  This methodology provides a fair market value referred to as
 "depreciated replacement cost."  In this case, that figure was $6,035,388.
      VELCO argued to the Board that its property was unique in Cavendish and
 the Board must, in the interest of equal treatment, apply the Town's AER of
 66.23 percent as calculated by the Vermont Division of Property Valuation
 and Review.  The Board found that VELCO's property was not unique within the
 Town, noting that Central Vermont Public Service (CVPS) had similar,
 although not identical, property in Cavendish.  It nonetheless found that
 the AER should be applied, relying upon a 1985 stipulation between Cavendish
 and CVPS (FN1) whereby the Town agreed to apply its AER to CVPS property for
 listing purposes.
      On appeal, the Town makes three arguments.  First, it contends that the
 Board erred in applying its AER to VELCO property because that ratio was not
 in fact applied to CVPS property.  Second, the Town argues that VELCO failed
 to meet its burden of establishing that its property was listed at a higher
 percentage of fair market value than comparable property in Cavendish.
 Finally, the Town, joined by amicus Vermont League of Cities and Towns
 (VLCT), argues that 32 V.S.A { 3620 and 32 V.S.A. { 3481 require that
 utility property be listed at full fair market value.
                                     I.
      The Town's first argument is that the Board erred in applying
 Cavendish's AER to VELCO's property because the Board found that the
 property was not unique.  Vermont law, it argues, required the Board to
 apply the equalization ratio applicable to comparable property.  Because
 Cavendish listed CVPS property at 100% of fair market value, despite the
 agreement to the contrary, the Town maintains that it must also list VELCO
 property at full value.  VELCO counters that its property is unique and that
 application of the Town's AER is therefore required.
      When reviewing tax assessments, the Board's function is to "determine
 whether the listed value of the property corresponds to the listed value of
 comparable properties within the town."  Kachadorian v. Town of Woodstock,
 149 Vt. 446, 447,