Opinion ID: 4584792
Heading Depth: 1
Heading Rank: 4

Heading: Phase 2: Disproportionate Taxation

Text: We next turn to the Towns’ challenges to the superior court’s decision in Phase 2, concluding that FairPoint was taxed disproportionately in the 2013 tax year by the Town of Durham and in the 2011 tax year by the Town of Hanover.3 The Towns’ challenges implicate the court’s valuations pertinent to both types of property taxes outlined above. Following a five-day bench trial, the superior court found, inter alia, that FairPoint had met its burden of demonstrating that it was taxed disproportionately by the Towns for the respective tax years in question. The court ruled that FairPoint was entitled to a $31,348.40 abatement from the Town of Hanover, and a $107,333.43 abatement from the Town of Durham. On appeal, we sustain the findings and rulings of the trial court unless they are lacking in evidentiary support or tainted by error of law. Public Serv. Co. of N.H. v. Town of Bow, 170 N.H. 539, 541 (2018). Determination of fair market value is an issue of fact. Appeal of Pennichuck Water Works, 160 N.H. 18, 37 (2010). It is extraordinarily difficult to value public utilities, and we give the trier of fact considerable deference in this area. Public Serv. Co. of N.H., 170 N.H. at 542. Although the parties and the superior court are seeking to have us clarify “what methodology is appropriate for experts to use in valuing the plaintiff’s property and the [municipalities’] rights-of-way,” we decline to do so. The decision to adopt a uniform methodology for valuing utility property and the use or occupation of public rights-of-way belongs to the legislature, not this court.4 See Appeal of N.H. Elec. Coop., 170 N.H. 66, 86 (2017). We have never 3We note that the Towns’ arguments on appeal are jointly asserted and do not identify any specific challenges to either of the two specific abatements at issue. 4 In 2016, the legislature passed House Bill 1198, which adopted the following formula for determining “[t]he value of wooden poles or conduits employed in the transmission of telecommunications owned in whole or in part by telephone utilities . . . for purposes of tax assessment against said entity . . . : the Replacement Cost New (RCN) of the telecommunications 11 attempted to tie the factfinder’s hands with a rigid fair market value formula in the absence of legislative directive. Id. at 74. Rather, judgment is the touchstone. Id. We proceed with our review accordingly. To succeed on a tax abatement claim, a taxpayer has the burden of proving by a preponderance of the evidence that it is paying more than its proportional share of taxes. Id. at 73. “To carry the burden of proving disproportionality, the taxpayer must establish that the taxpayer’s property is assessed at a higher percentage of fair market value than the percentage at which property is generally assessed in the town.” Id. (quotation omitted). A taxpayer cannot carry its burden by simply offering evidence tending to show that an assessor used flawed valuation methodology; it must also produce some credible evidence regarding the fair market value of its property. Porter v. Town of Sanbornton, 150 N.H. 363, 369 (2003) (“While it is possible that a flawed methodology may lead to a disproportionate tax burden, the flawed methodology does not, in and of itself, prove the disproportionate result.”). As we have repeatedly stated, the trier of fact may use any one or a combination of five appraisal techniques in valuing public utility property: original cost less depreciation (rate base or net book), comparable sales, cost of alternative facilities, capitalized earnings, and reproduction cost less depreciation. Public Serv. Co. of N.H., 170 N.H. at 542. Typically, all relevant factors must be considered, but a trier of fact need not allocate specific weight to any one of the approaches listed. Id. We have recognized that “[t]he search for fair market value is not an easy one, and is akin to a snipe hunt carried on at midnight on a moonless landscape.” Id. (quotation omitted). At trial, each party relied upon one expert witness. FairPoint presented expert testimony from Ann Bulkley of Concentric Energy Advisors, Inc., and the Towns presented expert testimony from George Sansoucy of George E. Sansoucy, P.E., LLC. Bulkley and Sansoucy each offered their expert opinions on the proper valuation of FairPoint’s poles and conduits, and FairPoint’s use or occupation of municipal rights-of-way. With respect to the valuation of FairPoint’s poles and conduits, the Towns first argue on appeal that the superior court “inappropriately shifted the burden of proof” from FairPoint to the Towns because, they argue, no reasonable factfinder could have found Bulkley’s “New England Utility Survey” (Survey), used in her valuation of FairPoint’s poles and conduits, credible. The Towns assert that, therefore, absent a credible expert from FairPoint, the court must have shifted the burden of proof to the Towns to demonstrate why their original assessments were correct in order to ultimately conclude that FairPoint pole or conduit, less depreciation calculated on a straight-line basis for a period of 40 years with a residual value of 20 percent.” RSA 72:8-c (Supp. 2019). However, given the timing of its enactment, this statutory formula is not applicable to this appeal. 12 was entitled to abatements. The Towns argue that the court could not have credited Bulkley’s Survey because the data on which she relied was not disclosed to the Towns or to the court, that it was not the Towns’ responsibility to seek to compel disclosure, and that the court’s error “is even more glaring” because the parties did not waive the statutory expert disclosure requirements under RSA 516:29-b (Supp. 2019). The Towns focus much of their argument on an alleged discovery violation regarding Bulkley’s failure to disclose the underlying “raw data” of her Survey, thus rendering the Survey too unreliable for the court to consider; yet, the Towns stipulated to the admission of the “expert reports” as full exhibits at trial, and the Towns aver on appeal that Bulkley’s Survey was “clearly admissible.” But see O’Donnell v. Moose Hill Orchards, 140 N.H. 601, 604 (1996) (explaining that a discovery violation with respect to expert disclosures goes to the admissibility of the expert’s testimony). Thus, despite their invocation and lengthy discussion of RSA 516:29-b, the Towns’ argument effectively criticizes only the weight the superior court accorded to Bulkley’s opinions on the valuation of FairPoint’s poles and conduits, i.e., the court’s evaluation of the credibility of FairPoint’s expert’s opinions. For the reasons discussed below, we find no reason to disturb the court’s findings regarding Bulkley’s, or Sansoucy’s, credibility. The Towns also argue that the court’s valuation of FairPoint’s poles and conduits “allow[ed] property to escape taxation.” They argue that by crediting Bulkley’s opinions and rejecting Sansoucy’s, the court’s valuation did not properly account for “attacher income,”5 “installation and construction costs,” mobilization costs, ledge-boring and bedrock installation costs, assemblage costs,6 and “contributions in aid of construction” (CIAC).7 Even assuming these items were not included in Bulkley’s valuation as credited by the superior court, we cannot conclude that the court erred. Absent a legislative directive, we will not tie the factfinder’s hands with a rigid fair market value formula for valuing public utilities. Appeal of N.H. Elec. Coop., 170 N.H. at 74, 86; cf. Public Serv. Co. of N.H., 170 N.H. at 542 (“We have never held that a single valuation approach or specific combination of approaches is correct as a matter of law.”). 5As referenced by the parties and the superior court, “attacher income” is income earned by FairPoint from “other utilities and cable companies” in exchange for the ability to attach their equipment to and use FairPoint’s poles. 6As referenced by the parties and the superior court, “assemblage costs” refer to costs associated with creating the right to use public rights-of-way. 7 As referenced by the parties and the superior court, “CIAC costs” refer to the costs of poles paid for by parties other than, in this case, FairPoint. 13 Bulkley and Sansoucy both utilized a replacement cost new less depreciation approach (RCNLD) to value FairPoint’s poles and conduits, and, as the court found, “followed the same general way of reaching RCNLD.” Differences in the experts’ methodologies regarding if and how to account for attacher income and the costs identified by the Towns on appeal implicate the credibility of each expert’s valuation, see Appeal of N.H. Elec. Coop., 170 N.H. at 77, 86, and “conflicts in the evidence were to be resolved by the trial judge, who could accept or reject such portions of the evidence presented as he found proper, including that of the expert witnesses,” Public Serv. Co. of N.H., 170 N.H at 542 (quotation omitted). The fact that each utility appraisal involves numerous discretionary decisions is precisely why the trial court, as the factfinder, is in the best position to weigh the testimony and determine whether an appraisal presents an accurate opinion of market value. Appeal of N.H. Elec. Coop., 170 N.H. at 77. The Towns are incorrect in arguing that Southern New Hampshire Water Co. v. Town of Hudson, 139 N.H. 139 (1994), stands for the proposition that CIAC “is required to be included in the valuation of taxable property in New Hampshire.” See Southern N.H. Water Co., 139 N.H. at 141-42 (noting, in the context of affirming that the trial court did not err in crediting the town’s expert’s reproduction cost calculation over the calculation of the utility’s expert, that the reason provided by the utility’s expert for excluding “over two million dollars’ worth of property donated to the utility by developers” rendered his calculation “suspect”). The Towns also argue, “There is nothing in New Hampshire case law which indicates that Sansoucy’s approach [to including attacher income in his valuation] is inappropriate or overstates the fair market value of the poles and conduits.” Yet, the lack of precedent rejecting Sansoucy’s approach would not compel the superior court to credit Sansoucy’s approach or reject Bulkley’s, which, according to the Towns, “ignored the value added to the poles and conduits through the attacher income.” Nor would the existence of precedent adopting Sansoucy’s approach in a prior case compel the superior court to credit said approach here. See Appeal of N.H. Elec. Coop., 170 N.H. at 74; cf. Public Serv. Co. of N.H., 170 N.H. at 542-43 (“[T]he credibility of an appraisal is a question of fact that the trial court must decide based upon the evidence presented in a given case.”). Concerning assemblage costs, the court found that they “should be associated with the value of the poles and conduits themselves, and not as part of the use of . . . the [rights-of-way],” but, the Towns assert, “it then failed to add those assemblage costs to its value of the poles and conduits despite ruling them taxable.” We understand the court’s discussion of assemblage costs to explain why, in part, it rejected Sansoucy’s valuation of FairPoint’s use or occupation of public rights-of-way, not to indicate that it had concluded that a valuation of FairPoint’s poles and conduits must include assemblage costs in order to be credible. See In the Matter of Salesky & Salesky, 157 N.H. 698, 702 (2008) (“The interpretation of a court order is a question of law, which we 14 review de novo.”). Nor can we conclude that the court erred as a matter of law in its determination of value for FairPoint’s poles and conduits, crediting Bulkley’s Survey in doing so, without specifically accounting for assemblage costs. See Appeal of N.H. Elec. Coop., 170 N.H. at 77, 86. To the contrary, the credibility of an appraisal is a question of fact that the trial court must decide based upon the evidence presented in a given case, Public Serv. Co. of N.H., 170 N.H. at 542-43, and the trial court is in the best position to determine whether an appraisal presents an accurate opinion of market value, Appeal of N.H. Elec. Coop., 170 N.H. at 77. Here, the superior court exercised reasoned judgment in weighing Bulkley’s and Sansoucy’s appraisals to derive, what it determined to be, an accurate valuation of FairPoint’s poles and conduits. See id. at 74 (explaining judgment is the touchstone of valuing utility property). Nevertheless, in regard to their arguments about the court’s failure to properly include certain costs, the Towns maintain that there was “no factual basis” for the court’s stated reasoning in rejecting Sansoucy’s mobilization costs, and there was “no evidence that supported” the court’s finding that Bulkley’s Survey “presumably include[d] mobilization cost[s].” Moreover, the Towns also argue that the superior court erred in finding Bulkley’s Survey reliable because the court assumed that “any bedrock installation costs included in the Survey would be the same for each town, regardless of the number of poles actually installed in bedrock in each town,” and also merely assumed that the Survey included “real world ledge boring costs.” Similarly, with respect to the valuation of FairPoint’s use or occupation of municipal rights-of-way, the Towns argue that the superior court erroneously credited Bulkley’s expert opinion because her conclusions as to “the width of the utility corridor,” the “percentage of use” attributable to FairPoint, and her equal allocation of the use of the utility corridor among FairPoint and attachers were “not supported by the record.” We conclude that the superior court’s findings regarding each expert’s treatment of attacher income, mobilization costs, and ledge-boring and bedrock installation costs, as relevant to its valuation of FairPoint’s poles and conduits, are supported by the record. The same is true for the court’s findings regarding each expert’s determinations of the utility corridor’s width and useallocations, relevant to valuations of FairPoint’s use or occupation of municipal rights-of-way. However, we agree with FairPoint that these arguments, claiming there was “no evidence” in the record or “no factual basis” to support various components of the court’s valuation of FairPoint’s poles and conduits and its valuation of FairPoint’s use or occupation of municipal rights-of-way, likewise sound in criticism of the court’s crediting of Bulkley’s opinions and rejection of Sansoucy’s. 15 For example, in asserting that portions of Bulkley’s valuation of FairPoint’s use or occupation of municipal rights-of-way were “not supported by the record,” the Towns argue that she “essentially adopted” Judge Morrill’s reasoning in Verizon New England, Inc. v. City of Rochester, Nos. 05-E-400, 05-E-401, 05-E-402, 2006 WL 3742673 (N.H. Super. Ct. Nov. 9, 2006) (Verizon), and that the court erred in crediting her appraisal when “there [was] no evidence in the record to support” applying Judge Morrill’s findings to this case. (Italics omitted.) However, after a detailed review of Bulkley’s and Sansoucy’s methodology and the approach used by Judge Morrill in Verizon, the superior court found that both experts “employed relatively similar approaches” to calculating the value of FairPoint’s use or occupation of municipal rights-of-way, and that “their approaches [were] comparable to those of the appraisers” in Verizon. Bulkley testified that the Verizon decision was the basis for her determination of the utility corridor’s width and testified that the same figures were “appropriate” in this case. While the court did find that Bulkley’s ten-percent allocation of use of the rights-of-way to FairPoint was the same result reached in Verizon, it independently evaluated her testimony about the propriety of her calculation for the tax assessments in this case. The court also evaluated Sansoucy’s proffered seventy-percent allocation of use to FairPoint and made detailed findings explaining why it found his determination to be unreasonable. See Public Serv. Co. of N.H., 170 N.H. at 542 (“As the fact finder, it was proper for the trial court to weigh the conflicting expert testimony.”). Furthermore, in arguing that there was no evidence to justify the court’s determination to allocate the use of rights-of-way equally among FairPoint and associated attachers, the Towns assert that “[t]he only evidence was Ms. Bulkley’s testimony.” Yet, the superior court credited this testimony after weighing it against Sansoucy’s criticism of Bulkley’s approach. See id. Although the Towns disagree with Bulkley’s conclusions, we defer to the superior court’s reasoned judgment of expert credibility. See id.; Appeal of N.H. Elec. Coop., 170 N.H. at 74. Similarly, the Towns’ argument regarding the court’s determination of the depreciation period for poles is, fundamentally, an argument about Bulkley’s credibility. The Towns claim that the court erred in “relying upon House Bill 1198 (2016) as a proper method of determining the depreciable life of a pole,” (bolding and capitalization omitted), as a substitute for either expert’s opinion. However, Bulkley put forth two analyses relating to pole depreciation, one of which utilized HB 1198 to recommend a forty-year depreciation period, and the superior court explicitly noted that “Bulkley conceded” that the forty-year period was reasonable, though “at the higher end,” for poles. After an in-depth analysis, the superior court found Bulkley’s opinion regarding the reasonableness of a forty-year depreciation period more persuasive than Sansoucy’s advocacy for a sixty-year period. The court’s 16 adoption of a forty-year pole depreciation period is supported by the record; therefore, we will not disturb it. See Public Serv. Co. of N.H., 170 N.H. at 542. We conclude that the superior court’s decisions to credit various opinions of Bulkley and to reject those of Sansoucy were reasonable based upon the evidence presented at trial. See id. The superior court did not accept Bulkley’s valuations carte blanche, but engaged in a mindful evaluation of her opinions, even rejecting some — which, contrary to the Towns’ argument, did not compel the superior court to discredit Bulkley’s expert opinions in their entirety. Appeal of N.H. Elec. Coop., 170 N.H. at 74 (“When faced with conflicting expert testimony, a trier of fact is free to accept or reject an expert’s testimony, in whole or in part.” (quotation and brackets omitted)). Because there is support in the record for the superior court’s valuations, we cannot find that the court erred as a matter of law in accepting Bulkley’s opinions on the value of FairPoint’s poles and conduits, and on FairPoint’s use or occupation of municipal rights-of-way. See, e.g., Public Serv. Co. of N.H., 170 N.H. at 543. The Towns raise a question of law in their challenge to the superior court’s decision in Phase 2 — that the court erred in concluding guy wires (guys) and anchors are not taxable under RSA 72:8-a. This question arose at trial because Sansoucy had included the cost of guys and anchors in valuing FairPoint’s poles, which the court found “add[ed] substantially” to Sansoucy’s valuation. During the relevant times, RSA 72:8-a provided in part: [A]ll structures, poles, towers, and conduits employed in the transmission of telecommunication, cable, or commercial mobile radio services shall be taxed as real estate in the town in which such property or any part of it is situated. The valuation of such property shall be based on its value as real estate. Other devices and equipment, including wires, fiber optics, and switching equipment employed in the transmission of telecommunication, cable, or commercial mobile radio services shall not be taxable as real estate. RSA 72:8-a. The Towns argue that guys and anchors “are clearly ‘structures’ as that term is used in the statute because they are constructed in conjunction with poles to keep them upright and stable.” In the alternative, the Towns argue that even if guys and anchors are not clearly “structures,” the statute “contemplates two categories of property: those parts which actively transmit services; and those that are the physical hosts for such transmission parts,” the latter category being taxable while the former is not. Because, the Towns contend, guys and anchors are part of the latter category, they are taxable. We find the Towns’ arguments unpersuasive. 17 The assessment and collection of taxes must be based upon legislative authority. segTEL, 170 N.H. at 120. It is well settled that the authority to tax “must be found within the letter of the law and is not to be extended by implication.” Pheasant Lane Realty Trust v. City of Nashua, 143 N.H. 140, 143 (1998) (quotation omitted). We review the superior court’s statutory interpretation de novo. Polonsky, 171 N.H. at 93. Turning to the Towns’ alternative argument first, we do not agree that RSA 72:8-a distinguishes between taxable and nontaxable property based upon the property’s role in transmitting telecommunications services, i.e., whether the property “actively transmit[s] services” or is a “physical host[].” The plain language of the statute identifies both taxable property and nontaxable property as being “employed in the transmission of telecommunication, cable, or commercial mobile radio services.” RSA 72:8-a. We presume that the legislature’s consistent use of this language was intended to convey the same meaning. See id.; see also, e.g., Anuj C. Desai, The Dilemma of Interstatutory Interpretation, 77 Wash. & Lee L. Rev. 177, 202 n.98 (2020) (referencing the “presumption of consistent usage” canon of statutory construction, “which presumes that when a word [or phrase] is used more than once in a text, the meanings are consistent”). Moreover, we will not add language that the legislature did not see fit to include, Polonsky, 171 N.H. at 93, to create a distinction in how the relevant property is in fact “employed in the transmission of telecommunication . . . services,” RSA 72:8-a; see id.; Pheasant Lane Realty Trust, 143 N.H. at 143. This leaves us with the question of whether guys and anchors are taxable as “structures” under RSA 72:8-a. We conclude they are not. In doing so, we need not define “structures” as used in RSA 72:8-a or articulate how the term differs from “[o]ther devices and equipment,” which are nontaxable, RSA 72:8- a, because a related statute demonstrates that guys and anchors were not intended as “structures,” see RSA 231:161; see also Rochester II, 151 N.H. at 267 (“When interpreting two statutes which deal with a similar subject matter, we construe them so that they do not contradict each other, and so that they will lead to reasonable results and effectuate the legislative purpose of the statutes.”). To refresh, RSA 231:161 provides the licensing, and permitting, procedure for erecting or installing telecommunications poles, structures, conduits, cables, or wires in public highways. See RSA 231:161. We now look to subparagraph VI, describing the effect of a license, which states in relevant part: The holder of such a license, hereinafter referred to as licensee, shall thereupon and thereafter be entitled to exercise the same and to erect or install and maintain any such poles, structures, conduits, cables, and wires in approximately the location designated by such license and to place upon such poles and structures the necessary and proper guys, cross-arms, fixtures, 18 transformers and other attachments and appurtenances which are required in the reasonable and proper operation of the business carried on by such licensee . . . . RSA 231:161, VI (emphasis added). Under RSA 231:161, VI, “necessary and proper guys, cross-arms, fixtures, transformers and other attachments and appurtenances” required in the reasonable and proper operation of a licensee’s business are “place[d] upon . . . poles and structures.” Id. Thus, guys and anchors are not themselves “structures”; rather, they are “place[d] upon” structures and poles. Id.; see id. Construing the term “structures” in RSA 72:8-a so as not to contradict this interpretation of RSA 231:161, VI, we conclude that guys and anchors are not “structures” within the meaning of RSA 72:8-a. See Rochester II, 151 N.H. at 267. Therefore, we hold that guys and anchors are not taxable under RSA 72:8-a. See segTEL, 170 N.H. at 120. The parties have not asked us to determine whether guys and/or anchors may be relevant to the taxation of another’s use or occupation of public rights-ofway under RSA 72:23, I; thus, we decline to address this question. Accordingly, we affirm the superior court’s decision in Phase 2, finding that FairPoint met its burden to prove it was taxed disproportionately by the Towns and consequently abating the two tax assessments at issue.