Court Opinion

ID: 2735431
Source: CourtListenerOpinion
Date Created: 2014-09-20 01:21:04.516237+00
Date Added: 2024-06-11T09:49:56.257687
License: Public Domain

2014 VT 93A

Vermont Transco LLC v. Town of Vernon (2013-243)
 
2014 VT 93A
 
[Filed 19-Sept-2014]
 
 

ENTRY ORDER

 

SUPREME COURT
  DOCKET NO. 2013-243

 

SEPTEMBER TERM, 2014

 

Vermont Transco LLC

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APPEALED FROM:

 

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     v.

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Property Valuation and Review
  Division

Town of Vernon

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}

DOCKET NO. 2011-130

 
In the above-entitled
cause, the Clerk will enter:
 
We grant appellant’s request to amend the opinion and extend the remand for
further findings on the first-year depreciation issue.  The opinion in
this case issued on August 8, 2014 is withdrawn and replaced with Vermont
Transco LLC v. Town of Vernon, 2013 VT 93A.  In all other respects,
appellant’s motion for reargument fails to meet the
criteria set forth in V.R.A.P. 40, and is therefore denied.
 

 

 

 

 

 

BY THE COURT:

 

 

 

 

 

 

 

 

 

 

 

Paul L. Reiber,
  Chief Justice

 

 

 

 

 

 

 

 

John A. Dooley, Associate Justice

 

 

 

 

 

 

 

 

Marilyn S. Skoglund, Associate Justice

 

 

 

 

 

 

 

 

Beth Robinson, Associate
  Justice

 

 

 

 
 

 
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 by email at:
JUD.Reporter@state.vt.us or by mail at: Vermont Supreme Court, 109 State
Street, Montpelier, Vermont 05609-0801, of any errors in order that corrections
may be made before this opinion goes to press.
 
 

2014 VT 93A

 

No. 2013-243

 

Vermont Transco LLC

Supreme Court

 

 

 

On Appeal from

     v.

Property Valuation and Review
  Division

 

 

Town of Vernon

May Term, 2014

 

 

 

 

 

 

Norman
  E. Wright, State Appraiser

 

 

 

Allan R. Keyes, Thomas M. Dowling, and Thomas S. Valente (On
the Brief) of Ryan Smith &
  Carbine, Ltd., Rutland, for
Plaintiff-Appellant.
 
Richard H. Coutant of Salmon &
Nostrand,
Bellows Falls, for Defendant-Appellee. 
 
 
PRESENT:  Reiber, C.J.,
Dooley, Skoglund, Robinson and Crawford, JJ.[1]
 
 
¶ 1.           PER CURIAM.   This property tax
appeal concerns the valuation of five electrical substations, seven
transmission lines, a fiber-optic line, land, and utility easements located
within the Town of Vernon.  Taxpayer Vermont Transco LLC challenges a
decision of the state appraiser fixing the 2011 listed value of taxpayer’s
utility property in the Town at $92 million.  We reverse and remand for
further findings regarding the lifespan of the property to be used in
calculating depreciation, and whether to depreciate the assets in the first
year of service.
¶ 2.           The
equipment at issue in this case was designed and installed to handle the
transmission of electric power generated by the Vermont Yankee Nuclear Power
Plant and the Vernon Hydroelectric Station.  Taxpayer is the successor to
Vermont Electric Power Company, Inc. (VELCO), which operates Vermont’s electric
transmission system.    
¶ 3.           The
town listers set a value of $92,023,693 on the
property effective April 1, 2011.  This value was upheld by the Town of
Vernon Board of Civil Authority.  Taxpayer appealed to the state appraiser
pursuant to 32 V.S.A. §§ 4461-4467.   
¶ 4.           On
appeal to the state appraiser, the principal issue was the correct method of
calculating depreciation with respect to the electrical equipment that
comprises almost the entire value of the property.  In addition, taxpayer
and the Town disagreed about whether the valuation should include the value of
utility easements and rights of way held by taxpayer, estimated by the Town’s
appraiser at $277,100.  Finally, the parties disagreed about whether to
apply depreciation for certain equipment’s first year of life.   
¶ 5.           In
May 2013, the state appraiser issued a ruling setting the total value of the
property at $92,023,700.  The state appraiser agreed with the Town and its
appraiser that an appraisal based on replacement cost new, depreciated in a
straight line, provided the most accurate basis for estimating the value of the
improvements.  The state appraiser did not address taxpayer’s arguments
that easements cannot be taxed and that depreciation should have been taken for
2010, the first year of service.  This appeal followed.  
¶ 6.           Taxpayer
raises four issues on appeal.  First, it argues that the state appraiser
should have used an alternative nonlinear depreciation schedule—the “Iowa
Curve” method—because that method was previously approved by this Court in
reviewing the method of property tax appraisal in Vermont Electric Power Co.
v. Town of Vernon, 174 Vt. 471, 807 A.2d 430 (2002).  Second, taxpayer
contends that the state appraiser’s decision on fair market value is not
supported by a sufficient analysis of the “core factual issues, including
whether fair market value is best estimated by the economic or physical life of
the assets, and what those lives are.”  Third, taxpayer contends that the
state appraiser failed to explain its decisions not to depreciate assets during
their first year of service.  Finally, taxpayer challenges the state
appraiser’s decision to include an appraised value for the utility easements. 
¶ 7.           In
an appeal to the state appraiser, a town’s property appraisal is presumed to be
valid and legal.  City of Barre
v. Town of Orange, 152 Vt. 442, 444, 566 A.2d 951, 952 (1989). 
If the taxpayer introduces evidence that his or her property was assessed above
fair market value, the presumption disappears.  Vanderminden
v. Town of Wells, 2013 VT 49, ¶ 8, 194 Vt. 96, 75
A.3d 598.  It is then up to the town to introduce evidence showing
“either that it substantially complied with the relevant constitutional and
statutory requirements or that its valuation was supported by independent
evidence of fair market value.”  Id. ¶ 8
(quotation omitted).  The taxpayer has the ultimate burden of
proving that the appraisal was incorrect.  Adams v.
Town of West Haven, 147 Vt. 618, 620 n.*, 523 A.2d 1244, 1245 n.* (1987). 

¶ 8.           We
will not disturb the state appraiser’s findings of fact unless they are clearly
erroneous.  Vanderminden, 2013 VT 49, ¶ 9.  “Our review of legal
conclusions, by contrast, is nondeferential and
plenary.” Barnett v. Town of Wolcott, 2009 VT 32,
¶ 5, 185 Vt. 627, 970 A.2d 1281 (mem.).
I. 
Depreciation Method
¶ 9.           This
is the second time in less than fifteen years that the state appraiser and this
Court have considered the depreciation schedule and appraised value of
taxpayer’s transmission equipment and realty within the Town.  See Town of Vernon, 174 Vt. 471, 807 A.2d 430 (affirming
town’s valuation of taxpayer’s utility property).  In 1999, the
Town conducted a town-wide reappraisal.  VELCO, taxpayer’s predecessor in
interest, appealed the Town’s valuation to the state appraiser.  Although
VELCO owned less property than taxpayer in this case (only one substation and
four parcels containing transmission lines), the issues resolved by the state
appraiser then were similar to the issues raised before the state appraiser in
this case.  In particular, the parties and their expert appraisers
disagreed about the appropriate depreciation methodology for the electrical
equipment.  The state appraiser accepted the methodology used by VELCO’s
expert, including the application of the Iowa Curve method to the useful life
of the equipment.[2]
 Id. at 472, 807 A.2d at 433. 
¶ 10.       We affirmed the
state appraiser on the ground that as the factfinder, the state appraiser
exercised his discretion appropriately in choosing the Iowa Curve method over
straight-line depreciation.  Id. at 473-74, 807
A.2d at 434-35.  We noted that the Iowa Curve method had been
employed in a previous tax appeal, Vermont Electric Power Co. v. Town of
Cavendish, 158 Vt. 369, 611 A.2d 389 (1992).  174 Vt. at 473, 807 A.2d at 435.  We ruled that the state appraiser’s
decision to use the Iowa Curve method was supported at the hearing below by
“testimony indicating that [this method was] standard practice in Vermont,
endorsed by the State Department of Taxes, and most appropriate for use with
transmission lines.”  Id. at 473-74, 807 A.2d at
435.  We further noted that “[t]he unswerving goal of the statute
is fair market valuation, but there is no single pathway to that goal.”  Id.
at 474, 807 A.2d at 435.
¶ 11.       In this appeal,
taxpayer claims that the state appraiser erred in failing to adopt the Iowa
Curve method as a matter of law on the basis of this Court’s decisions in Town
of Vernon and Town of Cavendish.
¶ 12.       At the hearing
before the state appraiser in this matter, an accountant employed by taxpayer,
Sharon Tucker, testified that in the valuation taxpayer submitted to the Town
it used the Iowa Curve method to calculate depreciation.  Ms. Tucker
testified that taxpayer adjusted the value of all equipment owned by taxpayer
through the use of the Handy-Whitman Index of Public Utility Construction Costs
to determine its “trended” or “replacement cost new” value.[3]  Taxpayer assigned each piece of
equipment to a thirty- or forty-year curve and calculated a depreciated value
on that basis.  If a piece of equipment had been owned for longer than the
depreciation schedule, taxpayer assigned a fixed value of 24.745%.  This
calculation resulted in a value of $80,950,830 for the equipment alone. 
Ms. Tucker testified that taxpayer used the Iowa Curve method because the
method had been approved by the State and this Court in Town of Vernon. 
¶ 13.       Taxpayer also
presented expert testimony from a professional appraiser, George Silver. 
Mr. Silver testified that he employed three appraisal methods (comparable
sales, cost, and income-based) to determine fair market value, and determined
that the cost approach was most appropriate.  Depreciation was relevant to
his cost analysis.  He employed straight-line depreciation over periods
ranging from forty-seven-and-a-half to sixty years for different classes of
equipment.  He calculated a total value of $83,100,000, of which
$79,775,250 was attributed to depreciable equipment.  The remainder is
land or improvements to land not subject to depreciation.  Mr. Silver
testified that he did not use the Iowa Curve method of depreciation for calculating
the fair market value of taxpayer’s equipment because he “ha[d] not seen the
Iowa Curve being used in market transaction[s], period.” 
¶ 14.       George Sansoucy, an appraiser retained by the Town as an expert
witness, employed the same three appraisal methods as Mr. Silver, and also
concluded that the cost approach was the best method for valuing taxpayer’s
property.  He also used a straight-line depreciation method in applying
the cost approach.  He used longer periods of estimated future life for the
equipment, ranging from sixty-five to ninety years.  He calculated a total
value of $92,023,700, of which $91,028,800 was attributed to depreciable
equipment.  Mr. Sansoucy was critical of the
Iowa Curve method, noting that the curves had not been updated since 1942, and
that they were not developed for high-voltage transmission lines, such as
taxpayer’s, which have a relatively long useful life and are not retired in the
same fashion as other industrial equipment.  He testified that the trend
in the utility industry was to move away from the Iowa Curve method because it
depreciates property too quickly.  He further noted that the Iowa Curve
method is typically used for book value analysis but not for appraising
property for ad valorem tax purposes.  The state appraiser found the
Town’s depreciation method persuasive and adopted its valuation.  
¶ 15.       “It is within the
discretion of the state appraiser to determine the most appropriate method for
arriving at fair market value,” including the method of depreciation.  Town
of Vernon, 174 Vt. at 473, 807 A.2d at 434. 
Taxpayer argues, however, that principles of finality preclude the Town and the
state appraiser from using a different method of depreciation for taxpayer’s
property than has been approved in prior cases.  
¶ 16.       “To properly
preserve an issue for appeal a party must present the issue with specificity
and clarity in a manner which gives the trial court a fair opportunity to rule
on it.”  State v. Ben-Mont Corp., 163 Vt. 53, 61,
652 A.2d 1004, 1009 (1994).  The same principle applies to appeals
from administrative agencies.  In re Green Mountain Power Corp.,
2012 VT 89, ¶ 73 n.7, 192 Vt. 429, 60 A.3d 654.   
¶ 17.        At no point
did taxpayer argue below that the state appraiser was required to use the Iowa
Curve method, or that the Town was precluded or estopped from arguing for the
use of a different depreciation method than the Iowa Curves.  At the
hearing, taxpayer’s accountant stated only that taxpayer used the Iowa Curve
method because that is the method it had used in the past, and its use was
approved in Town of Vernon.  In the proposed findings of fact and
conclusions of law that taxpayer submitted to the state appraiser after the
hearing, taxpayer stated that the Iowa Curve method “has been preferred
and recommended by the Vermont Department of Taxes Division of Property
Valuation and Review” and that the method “was specifically approved by the
Vermont Supreme Court in the Town of Vernon case.”  Taxpayer did
not argue, however, that the Town could not present an alternative method of
depreciation.  Nor did taxpayer argue that the state appraiser had to use
the Iowa Curve method.  Indeed, taxpayer’s own appraiser used the
straight-line method of depreciation, undermining its argument that no other
method was acceptable.  Not until this appeal did taxpayer argue that the
state appraiser was barred by principles of issue preclusion from using another
method.  Taxpayer therefore failed to preserve this issue, and we will not
address it here.   
II.  Lifespan of the Equipment
¶ 18.       Taxpayer’s second
point of error is that the state appraiser accepted the Town’s valuation
without making specific findings concerning the lifespans of the equipment to
be used in depreciation or addressing the proper approach for estimating those
lifespans.  In its prior decision, the state appraiser set the useful life
of taxpayer’s transmission lines at forty years and the substation at thirty
years.  Town of Vernon, 174 Vt. at 472, 807 A.2d
at 433.  In the course of testimony in this case, taxpayer’s
accountant set the average life of the transmission equipment at thirty to
forty years.  Taxpayer’s appraiser used an “economic life” approach,
resulting in estimated lifespans of fifty to sixty years for the equipment.  The
Town’s appraiser employed a “useful life” approach, resulting in estimated
lifespans of sixty-five to ninety years.    
¶ 19.       Because there
have been great changes in the quantity and value of taxpayer’s assets, the
state appraiser was not bound by the lifespan figures employed in the 1999 tax
year.  Taxpayer does not make this argument either.  Instead, the
state appraiser was obligated to make findings concerning the lifespan of the
equipment that are sufficiently detailed for us to determine whether they have
support in the record. See id. at 474, 807 A.2d
at 435 (“The state appraiser has a duty to make clear findings and state how
his decision was reached. A mere recitation of the contentions of the parties
is not sufficient to support the judgment.” (citation
omitted)).  We agree with taxpayer that although the state appraiser
accepted the Town’s estimates of useful life as part of a general approval of
its methodology, few reasons are provided.  The state appraiser’s decision
states only that “I am persuaded that the town’s approach to depreciation is
more appropriate than that advanced by Transco.  The evidence supports the
belief that a 65 year useful life span as advocated by the Town more accurately
reflects Transco’s assets in this appeal.”  This finding is insufficient.
 It is beyond the scope of a state appraiser decision to calculate the
depreciated value of each stick of furniture, but it is necessary to a fair
process that the basis for accepting the Town’s depreciation
figures receive a more complete explanation.  See Kachadorian v. Town of Woodstock, 144 Vt.
348, 351, 477 A.2d 965, 967 (1984) (explaining that state appraiser’s “[f]indings of fact must state clearly what was decided and how
the decision was reached” (quotation omitted)).  We therefore remand for
further findings on lifespans to be used for calculating depreciation.
III.  First Year of Life
¶ 20.       Taxpayer next
argues that the state appraiser failed to address its argument that equipment
acquired during calendar year 2010 should have been depreciated for a year as
of April 2011 and simply accepted the Town’s decision not to depreciate the
equipment without the necessary findings.  The Town asserts that the state
appraiser had discretion to accept the Town’s methodology and was not required
to specifically address the issue.
¶ 21.       In a property-tax
appeal, the state appraiser is required to make findings to support its
determination and in the face of conflicting evidence “must state clearly what
evidence it credits and why, so that the parties and this Court will know how
the decision was reached.”  Beach Props., Inc.
v. Town of Ferrisburg, 161 Vt. 368, 371, 640 A.2d
50, 51 (1994).  This Court will not affirm a decision that is not
supported by adequate findings.  Id.  
¶ 22.       Here, the
findings are insufficient because the state appraiser failed to explain how it
resolved the conflicting testimony.  Before the state appraiser, the
parties disputed whether taxpayer’s property, which was put into service in 2010 should have been depreciated for a full year. 
There was conflicting testimony as to the appropriate accounting method for
depreciating the assets.  The state appraiser did not specifically address
the issue, but simply stated generally that he was “persuaded that the town’s
approach to depreciation is more appropriate than that advanced by
Transco.”  This general statement is insufficient for this Court to
determine how the state appraiser evaluated the conflicting evidence and why it
reached the decision it did.  Therefore the matter is also remanded for
further findings.
IV.  Inclusion of Utility Easements
¶ 23.       This Court has
previously held that easements are not subject to Vermont’s municipal property
tax.  Vill. of Lyndonville v. Town of Burke, 146 Vt. 435, 438, 505
A.2d 1207, 1209 (1985).  Although this principle was established in
the special context of payment of property tax by one municipality to another,
our decision reflected a broader underlying concern that it is impossible to identify, value and tax the multitude of easements in a
reliable, efficient manner.  See id. (“It appears unreasonable to
conclude that the Legislature intended to cast upon the listers
the burden of determining the nature of the titles of various owners of
different interests in a piece of real estate.” (quotation
omitted)).  Instead, the value of the fee interest is taxed to the fee
owner without setoffs for easements conveyed to third parties.  The Town’s
principal rationale for changing this rule in the case of utility easements is
that they are large, obvious, and more valuable than an easement providing
seasonal access to a landlocked wood lot.  The statutory provisions which
govern the real estate tax make no distinction between great and small easements,
or between those which are used for the transmission of electricity and those
which provide access or convey well rights.  In the absence of a statute
singling out utility easements for different treatment, we will continue to
follow Village of Lyndonville in excluding easements from the grand list
of properties subject to tax.  The state appraiser therefore erred by
including the value of the easements in its valuation.  
Reversed and
remanded for further proceedings consistent with this opinion. 
 
¶ 24.       ROBINSON, J., concurring.   I join the
majority’s opinion in its entirety, but write separately to flag an issue that
warrants consideration by the legislative and executive branches.[4]
¶ 25.       Facilities used
in the generation, transmission, or distribution of electric power are valued
and included as real estate in a town’s grand list.  32
V.S.A. § 3602a.  The responsibility for assessing real estate
within a town falls to the town listers in the first
instance, and then on review to a town’s board of civil authority.  Id.
§§ 4041, 4221-4224, 4407-4411.  The statutory guidepost for assessing
property is fair market value.  Id. §§ 3620 (“Electric utility
poles, lines and fixtures . . . shall
be taxed at appraisal value . . . ”), 3481(1) (appraisal
value is estimated fair market value), 4041 (listers
to appraise property at its fair market value).  On appeal from the board
of civil authority, the taxpayer bears the burden of persuasion.  Littlefield v. Town of Brighton, 151 Vt. 600, 601, 563 A.2d
998, 999 (1989).  
¶ 26.       Under this
system, the listers and boards of civil authority of
different towns may use different appraisal methods for valuing similar kinds
of property.  We have recognized that “[a]ppraisal
is far from an exact science.”  Bowen v. Town of
Burke, 153 Vt. 131, 133, 569 A.2d 452, 453 (1989).  If
persuasive expert testimony potentially supports each of the different methods
used, the various tax assessments relying on differing methodologies may be
upheld on appeal.  There is no statute, rule, or other authority that
requires a uniform approach to valuing, for example, the type of electric
transmission facilities at issue in this case.
¶ 27.       The Division of
Property Valuation and Review (PVR) of the Department of Taxes is empowered to
adopt rules “to provide for the uniform administration of the property tax,” 32
V.S.A. § 3411(3), but apparently has not adopted any rules concerning the
valuation of electric transmission facilities.  PVR provides technical assistance and instruction to town listers, and helps towns administer property taxes, including assistance with classes
of property that are difficult to appraise.  Id.
§ 3411(5), (10); see also id. § 3436 (providing for education
programs by the PVR director for municipal listers
and assessors).  Apparently in that capacity, PVR has recommended since at
least 1991 that transmission lines be valued using actual costs determined
using Handy-Whitman tables, adjusted using Iowa Curve depreciation.  That
recommendation, however, is not binding on the listers. 
See, e.g., Franks v. Town of Essex, 2013 VT 84, ¶ 14, 194 Vt. 595,
87 A.3d 418 (upholding state appraiser’s decision rejecting valuation
methodology recommended by PVR).
¶ 28.       The
non-uniformity of appraisal methodologies from town to town may not be a
problem in the context of garden variety appraisals of residential and
commercial property.  But see Vanderminden
v. Town of Wells, 2013 VT 49, ¶ 24, 194 Vt. 96, 75 A.3d 598 (urging
Legislature or PVR to develop rules for valuing property that lies in multiple
towns).  But in this case, a single utility owns transmission lines and
other distribution facilities in dozens of towns throughout the state.  My
sense from the record and our prior cases is that, in general, towns throughout
the state have for some years used the methodology recommended by PVR. 
See Vermont Elec. Power Co. v. Town of Vernon, 174 Vt. 471, 472, 473-74,
807 A.2d 430, 434-35 (2002) (noting testimony that the Handy-Whitman/Iowa Curve
method was standard practice); Vermont Elec. Power Co. v. Town of Cavendish,
158 Vt. 369, 371, 611 A.2d 389, 390 (1992) (noting that State Board of
Appraisers used the Handy-Whitman/Iowa Curve formula to establish the fair
market value of electric transmission facilities).  Our decision today,
which is supported by the statutory and regulatory scheme and the record in
this case, may well lead to a patchwork of town valuation practices, so that
miles and miles of transmission lines and infrastructure may be depreciated and
thus valued and taxed very differently from town to town.  
¶ 29.       To the extent
that a town applies an average equalization ratio to its initial valuation of
the transmission facilities, calculated on the basis of all classes of
properties, see 32 V.S.A. § 4467; Town of Cavendish, 158 Vt.
at 373-74, 611 A.2d at 391-92, that adjustment may not wash out substantial
variations in the appraisals of essentially the same transmission facilities
from one town to the next.  Moreover, a patchwork scheme imposes on a
transmission utility taxpayer the added burden of depreciating and valuing its
hundreds of miles of transmission lines in small, town-by-town
increments.  And a utility seeking predictability, consistency and
uniformity might have to appeal dozens of tax assessments, still facing the
possibility that disparate adjudicators may be persuaded to adopt different
methods.
¶ 30.       PVR may be
empowered to fix this potential problem through rulemaking.  See 32 V.S.A.
§ 3411(3).  The Legislature is likewise well-positioned to address
the question of uniformity in appraising electric utility transmission
facilities.  I offer the matter for consideration by
both.    
 
¶ 31.       DOOLEY, J.,
concurring and dissenting.   This high-value complex case was
tried by lawyers for the taxpayer and the Town to an administrative hearing
officer appointed by the Director of Property Valuation and Review.  The
fundamental deficiency in the decision is that it consists only of five pages
of recitations of the evidence, followed by a short conclusory statement that
the hearing officer, called the state appraiser, found the Town’s expert
witness more persuasive than the experts presented by the taxpayer.  Its
conclusion was “I find the appellant was not able to overcome the Town’s market
and assessed value and it shall be set in the 2011 grand list at $92,023,700.”
¶ 32.       We have
repeatedly held, and particularly in property tax appeals, that recitations of
the evidence are not findings of fact, and that findings of fact are required.[5]  See Beach Props.,
Inc. v. Town of Ferrisburg, 161 Vt. 368, 371, 640
A.2d 50, 51 (1994); Saufroy v. Town of
Danville, 148 Vt. 624, 625, 538 A.2d 168, 168-69 (1987).  Where there
is conflicting evidence, the hearing officer “must state clearly what evidence
it credits and why, so that the parties and this Court will know how the
decision was reached.”  Beach Props., Inc.,
161 Vt. at 371, 640 A.2d at 51.  A valuation decision must be supported by
adequate findings, or it will not be affirmed.  Id.
¶ 33.       Ironically, one
of the main arguments made in the previous case about the valuation of this
property, Vermont Electric Power Co. v. Town of Vernon, was that the
hearing officer’s decision failed to contain clear findings and an explanation
of how the decision was reached.  174 Vt. 471, 807 A.2d
430 (2002).  In part because the Town squarely presented the
dispute as turning on whether to adopt the Iowa Curve for calculating
depreciation and the life expectancy of the property, and because the primary
deficiency actually helped the Town, we found we did not have “to speculate on
how the conclusion was reached.”  Id. at 474, 807
A.2d at 435.
¶ 34.       This case
presents a more extreme example of the deficiencies in the earlier
administrative decision.  There are no valid findings of fact, and we do
have to speculate on how the hearing officer reached his decision on the
elements of the value of the property and, therefore, on the property as a
whole.  It is a poor quality decision that does not meet the minimum
standards we have announced in many decisions.[6]  The parties filed extensive
requests for findings, which the hearing officer could easily have used to make
findings of fact demonstrating the rationale for the decision.  Instead,
those requests for findings were largely wasted.
¶ 35.       I do not believe
we can uphold any of the decision, including the rejection of the use of the
Iowa Curve.  Although I agree with the majority that taxpayer failed to
preserve its claim preclusion argument, I do not agree that we can affirm the
hearing officer’s decision to use straight-line depreciation without adequate
findings.  To summarize, I agree with sections I, III, and IV of the
majority decision.  I also agree with section II, but do not believe it
goes far enough. 
¶ 36.       This case raises
a strong question as to whether the administrative process is up to the decisionmaking that is called for.  At one point in
the past, we reversed and remanded virtually every decision that came from the
administrative hearing authority for property tax appeals, usually because of
inadequate findings.  See, e.g., Spencer v. Town of
Danville, 148 Vt. 626, 538 A.2d 169 (1987); Saufroy,
148 Vt. 624, 538 A.2d 168; Gouin v. Town of
Halifax, 148 Vt. 524, 535 A.2d 788 (1987); Adams v. Town of West Haven,
147 Vt. 618, 523 A.2d 1244 (1987); Roy v. Town of Barnet, 147 Vt. 551,
522 A.2d 225 (1986).  Over time, the appeals process was reformed
to the single hearing officer model we now have, and the quality of the
adjudication improved so that most administrative decisions are affirmed by
this Court.  Nevertheless, the quality of adjudication of cases involving
high-value commercial and industrial properties has continued to raise
concerns.  Examples are this case, the previous case involving the same
property, and the Beach Properties case, 161 Vt. 368, 640 A.2d 50, which
involved a large resort.
¶ 37.       The Legislature
has offered the appealing party a choice in property tax cases: to appeal to
either (a) the Director of Property Valuation and Review, or (b) the superior
court.  32 V.S.A. § 4461(a).  The
taxpayer chose the administrative process—I suspect because it thought that the
hearing officer would just rely upon the 2002 decision.
¶ 38.       In my opinion, a
case of this size and complexity, where each party is fully represented by
counsel, belongs in superior court where the judge is more used to evaluating
expert testimony of this intricacy and is skilled in producing a good quality
and complete decision.  The Legislature should reconsider the unfettered
choice the current statute allows and restrict larger cases, like this, to
court appeals.  While I would expect the administrative appeal route to be
initially less expensive and more efficient, it is not ultimately so if the
chance of reversal on appeal is very high.  In any event, the amount in
controversy is sufficiently high to warrant a higher-cost adjudication process.
 
                                   
           
           
           
            BY THE
COURT:
 
 
Dissenting:                                        
           
           
__________________________________
                                               
                                   
Paul L. Reiber, Chief Justice
 
___________________________________ 
           
__________________________________
John A. Dooley, Associate
Justice                            
Marilyn S. Skoglund, Associate Justice
 
                                                                       
            __________________________________
                                                                                   
Beth Robinson, Associate Justice      
 

[1] 
Justice Crawford did not participate in this amended decision.

[2] 
The Iowa Curves were first published in 1935 and are based upon retirement
patterns of 176 classes of industrial equipment.  R. Winfrey, Iowa Eng’g Experiment Station, Bulletin No. 125, Statistical
Analyses of Industrial Property Retirements 7-9 (1935).  As the
state appraiser explained in Town of Vernon:
 
Essentially this statistical study asserts
that depreciation is NOT straight lined, but curvilinear. This method
acknowledges a schedule of 30 to 40 year economic life estimates but
compensates for remaining functional utility (a factor other than age) by
leveling off after accelerated depreciation thereby avoiding excessive
depreciation by keeping the depreciation from going to zero.
174 Vt. at 475, 807 A.2d
at 436. 

[3] 
Both parties used the Handy-Whitman Index for this purpose, and there was no
dispute about the replacement cost new for the equipment. 

[4] 
Justice Dooley has identified another issue—a procedural path for review of
local assessment determinations that is ill-suited to addressing the issues
presented in a case like this.  Post, ¶¶ 36-38.  

[5] 
Taxpayer has also relied on 3 V.S.A. § 812(a), which requires “findings of
fact and conclusions of law, separately stated.”

[6] 
Because the hearing officer concluded that taxpayer “was not able to overcome
the Town’s market and assessed value,” taxpayer has argued that the decision
was reached improperly based on a presumption.  The improper use of the
presumption of validity of the Town valuation has been another source of
frequent reversals of administrative valuation decisions.  E.g., Rutland Country Club v. City of Rutland, 140 Vt. 142,
146, 436 A.2d 730, 732 (1981).  In this case, however, the statement to which the taxpayer points is vague and does not
necessarily invoke a presumption.  While it would have been preferable for
the hearing officer to state that taxpayer failed to meet its burden of
persuasion, I cannot say that the hearing officer improperly used a
presumption.