2009-335, Manchester Water Works v. Town of Auburn

easement placed on its property. We affirm.

(2003) because its assessment did not contain a reduction for a conservation Auburn. The Water Works petitioned for an abatement pursuant to RSA 76:17 dismiss its petition for a tax abatement filed by the respondent, the Town of appeals an order of the Superior Court (Lewis, J.) granting the motion to HICKS, J. The petitioner, Manchester Water Works (Water Works),

respondent. Moore and Stephanie E. Zywien on the brief, and Mr. Moore orally), for the Devine, Millimet & Branch, P.A., of Andover, Massachusetts (George R.

Harris & a. on the brief, and Mr. Harris orally), for the petitioner. McLane, Graf, Raulerson & Middleton, P.A., of Manchester (Scott H. to press. Errors may be reported by E-mail at the following address:

page is: http://www.courts.state.nh.us/supreme. MANCHESTER WATER WORKS

No. 2009-335 editorial errors in order that corrections may be made before the opinion goes Rockingham Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New ___________________________

a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00

well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule 22 as charge in that year.

p. 2 that such payment will not exceed its proportion of the public

value of other property in the town which is subject to taxation, so change, as to make such value proportional with the assessed acquisition the valuation thus established shall be subject to

December 1 in each year; provided, however, that after such

abatements thereon . . . such payments shall be made on or before thereof, the valuation for each year being reduced by all preceding legal process to acquire the same, or other acquisition

land, without buildings or other structures, for the 3 years last

receive for taxes upon the average of the assessed value of such property lies an amount equal to that which such place would so holding it shall annually pay to the city or town in which such

states in pertinent part:

the assessed value of the property minus any abatements. RSA 72:11; Society for the Protection of New Hampshire Forests on a 460-acre parcel of its lies. RSA 72:11; In March 2007, the Water Works granted a conservation easement to the

Works has the same right of appeal as any other taxpayer. See RSA 72:11. assessing the full and true value of any other parcel of property”). The Water shall not be liable to taxation therein, but the city, town or district supply land be valued in accordance with the same principles as are used in Manchester II, 125 N.H. at 153 (noting that RSA 72:11 requires that “water that it assesses the “full and true” value of any other parcel of real estate. Auburn also must assess the value of the subject property in the same manner benefit, or a condition upon the grant of a power”). Specifically, RSA 72:11 Manchester v. Town of Auburn, 125 N.H. 147, 153 (1984) (Manchester II).

RSA 72:11. Accordingly, the Water Works must make payments based upon

make annual payments in lieu of taxes to the city or town where the property

the purpose of a water supply or flood control, if yielding no rent, flood control property in dispute here.

realm of taxation, and impose a charge in the nature of a charge for special

purpose of a water supply or flood control,” but requires that the public entity

Property held by a city, town or district in another city or town for water. Both parties agree that RSA 72:11 (2003) governs the taxation of the of Auburn. Lake Massabesic is the primary source of Manchester’s drinking owns real property along Lake Massabesic and its watershed within the Town

that RSA 72:11 “was plainly intended to take water supply property out of the

see Manchester v. Auburn, 102 N.H. 325, 329 (1959) (stating

RSA 72:11 exempts from taxation land owned by a municipality for “the

subdivision of the City of Manchester that provides drinking water for the city, The following facts appear in the trial court’s order. The Water Works, a payment in lieu of taxes.” p. 3 related purposes, of the [p]roperty, and in arriving at its calculation of the due bounds in not considering the [e]asement in determining the value, for tax-

easements. The trial court, therefore, ruled that “Auburn acted within proper

79-A and 79-B, which govern the municipal taxation of conservation revocation.” In other words, the easement did not comply with RSA chapters “self imposed” use restriction on real property “subject to termination or

trial court granted the motion, finding that the easement was an impermanent, valuation purposes under RSA 72:11. The easement did not have to meet the

determining the assessed value of the property. 3

proportionate valuation. In response, Auburn filed a motion to dismiss. The and, therefore, the conservation easement should have been considered for tax arguing that the assessed valuation of the property exceeded its just and Subsequently, the Water Works filed a petition for abatement in superior court,

did not account for the Water Works’ easement to the Forest Society in

of a construction that would permit recovery. whether the allegations contained in the pleadings are reasonably susceptible Water Works contends that the easement is a valid conservation restriction, conservation easement “a nullity for tax valuation purposes.” Specifically, the application, and the Water Works made its payment under protest. The Water Works maintains that the trial court erred in finding the purpose of the easement is to reduce the Water Works’ tax burden. improper to grant the motion to dismiss. Id. and if the allegations constitute a basis for legal relief, we must hold that it was threshold inquiry that tests the facts in the petition against the applicable law, reasonable inferences in the light most favorable to it. Id. We then engage in a property. This is the same method Auburn uses for any tax appraisal. Auburn 72, 73 (2008). We assume the petitioner’s pleadings to be true and construe all property as undeveloped lakefront property — the highest and best use of the McNamara v. Hersh, 157 N.H. payment by using a rate of $13.71 per $1,000.00 of the assessed value of the In reviewing a trial court’s ruling on a motion to dismiss, we consider

citing the conservation easement. Auburn’s board of selectman denied the thereby protecting Manchester’s water supply. Auburn, however, contends the

lieu of taxes pursuant to RSA 72:11. Auburn arrived at the demanded

In February 2008, the Water Works filed a timely abatement application purpose is “to provide long-term protection of such land against development,” favor of the Forest Society. This option agreement provides that the easement’s notice. Concurrently, the Water Works entered into an option agreement in

In November 2007, Auburn sent the Water Works a notice of payment in

rights to the Forest Society, subject to a right to terminate on thirty years’ property. The easement provides for a permanent transfer of development benefit.” RSA 79-B:1 (2003).

p. 4 taxability.” purposes of taxation. As we have previously stated, “[t]itle is not the test of restrictions on such open space land which provides a demonstrated public interest by promoting the granting and acquisition of permanent conservation further assist in the preservation of open space in this state in the public

the protection of environmental quality.” RSA 477:45, I;

conservation restriction for purposes of conveyance and enforcement — not for

conservation uses to which the land is perpetually limited,” as well as “to

scenic, or open condition . . . or in any other use or condition consistent with respect to, or uses of, a land or water area,” in order to maintain its “natural, easement “prohibit[s] or require[s], a limitation upon . . . acts on or with

conservation restriction should be assessed and valued. It defines a

the use of a ‘conservation restriction’ to reduce its payment in lieu of taxes.” restriction land which provides a demonstrated public benefit, based upon the consistent and equitable method of municipal assessment of conservation easements. The stated intent of RSA chapter 79-B is “to provide for a fair, RSA chapter 79-B governs the municipal taxation of conservation

conservation restriction under RSA 477:45, I (2001). The Forest Society Piper v. Meredith, 83 N.H. 107, 109 (1927).

taxable value of the property. RSA 477:45 does not address how a municipal RSA 477:45 does not mean that it must be considered in determining the definite unwillingness to permit a water works entity . . . to at all avail itself of together with all associated sections. (2001), :47 (Supp. 2009). Nevertheless, that the easement may comply with

words used.

Forest Society easement appears to meet the statutory definition of a court should have considered the Forest Society easement. We agree that the statutes. The interpretation of a statute is a question of law, which we review N.H. at 153, for purposes of RSA 72:11, the Water Works contends the trial In assessing the “full and true” value of the property, Manchester II, 125

disagrees with the trial court’s finding that “the legislature has evinced a reasonable result and review a particular provision, not in isolation, but taxable value of property.” (Bolding omitted.) Finally, the Water Works Id. We interpret a statute to lead to a was not “the type of self-imposed restriction that is discounted in determining will not consider what the legislature might have said or add language that the

Id. We interpret legislative intent from the statute as written and

language of the statute, we ascribe the plain and ordinary meaning to the de novo. MacPherson v. Weiner, 158 N.H. 6, 9 (2008). When examining the

The Water Works’ arguments on appeal require us to construe various

(2003) to be considered for tax purposes as the trial court found. Further, it more restrictive definition of a “conservation restriction” under RSA 79-B:2 purpose of a water supply or flood control.

p. 5 reference to RSA 79-A:2). Here, the subject land was held specifically for the

Manchester. 72:11.” RSA 79-A:2, IX (2003); RSA 79-B:2, VII (defining open space land by taxable value of property.” In support of this argument, the Water Works cites control, for which a payment in place of taxes is made in accordance with RSA district in another city or town for the purpose of a water supply or flood the lake — a twenty-five percent increase in value.

prohibition, should not be considered for tax valuation purposes. the lake as the primary source of potable water, and the would-be buyer would RSA 72:11 payments. “[e]ven if [the Water Works] were to sell its property, it would not cease to use Id. at 158. They were restrictions on the use of the lake. Id. We reasoned that “granted in perpetuity.” whatever be their source, are not restrictions on the subject property itself.” restriction under RSA 79-B:2, IV. It is not a “permanent restriction” on land argument and held that “[t]he restrictions against activities on the lake, Forest Society easement does not meet the definition of a conservation See id. at 150, 158. In Manchester II, we rejected Auburn’s These restrictions existed to ensure a clean water supply for the City of is “not the type of self-imposed restriction that is discounted in determining the Lake Massabesic’s activity restrictions were “self-imposed” restrictions. Id.

that activity restrictions imposed on Lake Massabesic, such as a swimming

determined the value of the Water Works’ lake front property for the purpose of In Manchester II, as here, we examined whether Auburn had properly

Manchester II. the purposes of natural resource conservation . . . .” RSA 79-B:2, IV. Here, the

valuing the property’s fair market value. It affects the value of the property and not qualify for favorable current use tax treatment, it “must be considered” in 79-B:2, VII. Open space land is “any or all farm land, forest land, or The Water Works contends that even if the conservation easement did

current use favorable tax treatment. the Forest Society easement is not a conservation restriction that qualifies for 79-B:2, VII. Therefore, based upon the plain language of the relevant statutes,

by deed granted in perpetuity, and further, as defined by RSA 477:45, I, . . . for

Further, the property is not “open space land” as contemplated by RSA

rescinded by the Water Works upon thirty years’ notice.

a conservation restriction must be “a permanent restriction of open space land with RSA 477:45, I. To qualify for favorable tax treatment under chapter 79-B, restriction more narrowly than does RSA 477:45. Compare RSA 79-B:2, IV To further these two purposes, RSA chapter 79-B defines a conservation treatment conservation restrictions will receive. p. 6 control, of the property owner.” RSA chapter 79-B informs what type of tax versus those that just place “limitations on value in the hands, or in the 6

servient estate. not revocable at the will of the homeowner’s association, the owner of the

the owner to use of the common property. the easement affects the value of the property. The Water Works cites

“attach to the property itself and encumber it in the hands of successors”

encumbered with easements that it had no taxable value.” Waterville Estates, 122 N.H. at 509-10. The value of these easements, careful imposition of limited restrictions in the deeds to their properties.” development, was entitled to a tax abatement because the property “was so value and, thus, the property association was entitled to a tax abatement. Id.; effectively control the valuation of their properties for taxation purposes by servient property, was subjected to so many easements that it had no taxable treatment. It would be against public policy to “allow property owners to See, e.g., id. Therefore, we held the common property, the

142. These interests were easements intended to run with the land and were

122 N.H. at 509-10. Each homeowner’s deed included an “easement” entitling imposed restriction, it should be considered for tax valuation reasons because benefit of the homeowners. Locke Lake, 126 N.H. at 142; Waterville Estates, found that the common property, the servient property, was established for the N.H. at 142; Water Works’ invitation to differentiate between self-imposed restrictions that see also Waterville Estates, 122 N.H. at 508. In both cases, we the Forest Society does not mean they are not “self-imposed.” We decline the Locke Lake, 126 among other restrictions. The fact that these restrictions are enforceable by property association, which held title to common property within a real estate proposition. In Waterville Estates and Locke Lake, we examined whether a must comply with RSA chapter 79-B requirements to receive favorable tax Lake Colony Assoc. v. Town of Barnstead, 126 N.H. 136 (1985), for this Waterville Estates Assoc. v. Town of Campton, 122 N.H. 506 (1982), and Locke

Finally, the Water Works argues that even if the easement is a self-

1978). Hoover v. State Bd. of Equalization, 579 S.W.2d 192, 196 (Tenn. Ct. App.

harvesting,” and prevents the construction of any dwellings on the property,

Indeed, as a self-imposed conservation restriction, the Forest Society easement

property], except agriculture and forestry, including [limited] timber conservation easement prohibits “industrial or commercial activities [on the restriction on the use of the subject property itself. The document creating the By contrast, here, the Forest Society easement is a self-imposed

true value of the property.” Id. at 158. Auburn had to consider these activity restrictions in determining “the full and Manchester with water for over a hundred years. See id. at 150. Therefore, take subject to said restrictions.” Id. Lake Massabesic had supplied p. 7 7

motion to dismiss the Water Works’ petition for an abatement of assessments.

DALIANIS and DUGGAN, JJ., concurred.

Accordingly, we conclude that the trial court properly granted Auburn’s

thirty years notice. It is not perpetual. See RSA p. 7 79-B:2, IV. by the servient land owner, the Water Works, not the dominant owner, on Waterville Estates and Locke Lake. The Forest Society easement is revocable asserts. We also note that here the easement is distinct from the easements in considered in assessing the taxable value of a parcel” as the Water Works Locke Lake, 126 N.H. at 141. We did not hold that an easement “must be however, could be added to the value of the estate of the dominant owners.