N.H. Property Tax Round Up 2018 – The Hunt for Snipe On A Moonless Landscape
Published in the February, 2019 issue of the New Hampshire Bar News and on the New Hampshire Bar Association web site.
The General Court and Supreme Court each addressed issues affecting property taxation in 2018. Here is a summary of some of the key developments.
Court Decisions
The NH Supreme Court took up the often-litigated subject of valuing utility property in PSNH v. Town of Bow, 170 NH 539 (2018). In that case the Town of Bow appealed the decision of the trial court granting the abatement to PSNH for the utility property it owned in the town, including the Merrimack Station, two combustion turbines, and high-voltage electric regional transmission and distribution network. The Court prefaced its analysis with a quote that often finds its way into property tax cases where valuation is an issue: “The search for fair market value . . . is akin to a snipe hunt carried on at midnight on a moonless landscape.” My research indicates that snipe hunting is often conducted on moonless nights, nevertheless this quote may be particularly appropriate for indicating the difficulty of valuing utility property given the attention that this State’s highest court has had to pay to this subject over the years. The Town raised a number of objections to the valuation methods used by PSNH’s expert and adopted in the trial court’s decision. One of the Town’s objections was the use of what is known as net book value for the valuation of the transmission and distribution network. Net book value is determined by calculating original cost less depreciation. The Supreme Court deferred to the trial court’s assessment of the credibility of each of the experts as the principal basis for upholding the trial court’s decision.
In Polonsky v. Town of Bedford, 190 A.3d 400 (2018), the Supreme Court reversed the trial court’s ruling that a former-owner of a tax-deeded property could bring an action to recover proceeds of a tax sale to recover amount received by the municipality in excess of tax, interest, and penalties if the sale occurs after three years form the deeding of the property. The case involved the interpretation of RSA 80:89, VII which limits the time in which a municipality has a duty to give notice of a tax sale and distribute excess proceeds to a former-owner pursuant to RSA 80:88 to three-years. The Supreme Court found that according to the express language of the statute the legislature did not intend to allow a former owner to recover any excess proceeds after three years from the date of the tax deed, and therefore under the statutory scheme a municipality could retain all proceeds from the tax sale conducted after three years. However, rather than rule on the constitutionality of a municipality’s retention of amounts in excess of taxes, interest and penalties, the Supreme Court remanded this issue to the trial court without a ruling.
General Court
Chapter 238, Laws of 2018, established a study committee to reform the state’s system of valuing utility property. This bill is designed to make more uniform the manner in which utility property is valued. Under the current system the methods used to value utility property vary among municipalities and from the methods used by the Department of Revenue Administration. The results of the subcommittee’s work can be found in a bill that is pending this legislative session, House Bill 700. The “hunt for snipe under a moonless landscape” quote found its way into the statement of intent in this bill. In its current form, HB 700 adopts net book value as the exclusive method for valuing utility property.
Another significant piece of legislation, Chapter 282, effective the tax year beginning April 1, 2019, lowers the amount of interest taxpayers must pay on property tax not paid within thirty days after bills are mailed from 8 percent from the current rate of 12 percent. The interest rate on properties subject to a tax lien was reduced to 14 percent from 18 percent.
In the same piece of legislation, the legislature changed the deadline for applying for a prorated assessment on a building damaged by fire or other natural disaster to the later of sixty days after the loss or March 1. This addressed the issue decided in Carr v. Town of New London, 161 A.3d 753 (2017), in which the Supreme Court held that even though the taxpayer had missed the 60-day deadline to apply for a prorated assessment under RSA 76:21, the taxpayer was entitled to an abatement for good cause under RSA 76:16.
Finally, a few legislative changes were made to the property tax system to benefit veterans and service members. Chapter 105 increased the amount of the optional veteran’s tax credit for service-connected disability was from $2,000 to $4,000, and Chapter 148 increased the optional veteran’s tax credit from $500 to $750. Additionally, Chapter 151 established an optional combat service credit for members of the National Guard or reserves engaged in combat service in amount from $50 to $500.
John F. Hayes is the General Counsel to Allobar Strategies, a commercial tax abatement company located in Concord. He was the Revenue Counsel to the New Hampshire Department of Revenue Administration for over 13 years and represented the State of New Hampshire in some of the most significant property tax cases in recent years.
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