2010-094, Appeal of City of Lebanon

Gardner Fulton & Waugh, P.L.L.C.

(New Hampshire Board of Tax and Land Appeals)

No. 2010-094

West to sublease the property to Walgreen Eastern Co., Inc. (Walgreen), making and operate a Walgreens drug store on Lot 6. The terms of the lease allow GP Board of Tax and Land Appeals a ground lease with GP West Lebanon, LLC (GP West) to allow GP West to build city’s Tax Map 114 as Lots 6 and 8 respectively. In 2004, the trust entered into adjacent parcels located at 3 and 5 Airport Road in Lebanon, identified on the The following facts are supported by the record. The trust owns two

2006 and 2007. We affirm. Realty Trust (trust) an abatement of taxes imposed on its property for the years Hampshire Board of Tax and Land Appeals (BTLA) granting Colonial Plaza HICKS, J. The City of Lebanon (city), appeals a decision of the New

Sulloway & Hollis, PLLC ___________________________

THE SUPREME COURT OF NEW HAMPSHIRE orally), for the respondent.

the brief and orally), for the petitioner.

page is: http://www.courts.state.nh.us/supreme. 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 to press. Errors may be reported by E-mail at the following address: editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule 22 as p. 2 See contesting the 2006 and 2007 assessments of Lot 8 pursuant to RSA 76:16-a. On August 24, 2007, the trust filed a tax appeal with the BTLA

the case may be.. . .

Estate Taxes obtained shall be paid or credited to Tenant, as

and signing pleadings. Any reduction or refund of Real

no cost to Landlord) in such contest, including, joining in

agrees to provide Tenant with all reasonable assistance (at

estate taxes in its own or in Landlord’s name and Landlord

Estate Taxes for the Premises. Tenant may contest such real

a reduction or abatement in, or otherwise challenge, the Real (iii) Tenant shall have the right, at its expense, to seek

. . . .

Subtenant. . . .

real estate tax bills shall be in the name of Tenant or

directly to Tenant and, at Tenant’s request, if possible, the

Premises forwarded by the applicable taxing authorities (i) Landlord shall have all real estate tax bills for the

delinquent and shall be deemed to be “Additional Rent”. . . .

Premises (“Real Estate Taxes”) before such taxes become

(a) Tenant shall pay all taxes levied or assessed against the

taxes, the lease provides, in pertinent part: Leased Premises, Building and Site Improvements.” With respect to real estate addition, it states that Walgreen “shall maintain and repair all portions of the identified Lots 6 and 8 as being owned by the trust. store” and the right to enter into agreements with utility companies. In for all property owned by the [trust], whether or not appealed.” The city “construct a building and improvements for the initial use as a Walgreens appeal process, the BTLA requested that the city “provide map/lot numbers . . . responsibilities, the responsibility to demolish any existing improvements and contesting the 2006 and 2007 tax assessments of Lot 6. As part of the trust’s Lot 6 as well as Lot 8. At some point, Walgreen filed a separate tax appeal RSA 76:16-a (2003). In its appeal, the trust did not indicate that it owned

The lease provides Walgreen with, among other rights and

after the first twenty-five years. years with Walgreen having the right to terminate the lease at specified periods Walgreen the effective tenant under the lease. The lease term is for seventy-five p. 3 76:16-a, which give[] ‘any person aggrieved’ by a tax assessment the right to “operative significance to the words used by the legislature in RSA 76:16 and the valuation of Lot 6 in its appeals. According to the BTLA, in doing so, it gave abatement appeals and, thus, the trust did not have to present evidence as to The BTLA found that the lots are separate estates for purposes of the tax

disproportionate or illegal under Appeal of Town of Sunapee lots must be considered in determining whether the assessments of Lot 8 were argued that because the trust owns Lot 6 and Lot 8, the assessments of both Subsequently, both parties submitted memoranda of law. The city

between the [trust] and the [city] that . . . [Lot 6] . . . would not

the assessments on Lot 8. have to present evidence regarding the proper valuation of Lot 6 in its appeal of possession and use of Lot 6 for up to seventy-five years, the trust should not the trust, since Walgreen consented to be taxed on Lot 6 and has exclusive proportional assessments of each lot under New Hampshire law.” According to treated as separate estates for the purposes of determining the fair and (1985). Conversely, the trust maintained that Lot 6 and Lot 8 “should be Thereafter, an issue arose regarding “whether there was an agreement based on several lines of authority, including Appeal of Sunapee, 126 N.H. 214 The board notes the parties take conflicting positions on this issue against any underassessment of the Walgreen drug store (Lot 6).

or two” issue. The BTLA deferred ruling on this issue, which it referred to as the “one estate

No. 2. August 26, 2008 “Wal-Mart” Order, submitted as Taxpayer Exhibit 126 N.H. 214, 217 (1985), cited by the City, and the board’s

overassessment on the Colonial Plaza shopping center (Lot 8) whether the City, in the [trust’s] appeals, can offset any

what it deemed to be a “larger substantive issue”: Lot 6 would not be a part of the [trust’s] appeals.” The BTLA then identified that “no agreement existed between [the trust] and [the city] to the effect that appeal for each tax year.” Following a hearing on this issue, the BTLA ruled

should be included in this docket.” the City of Lebanon that Map 114/Lot 6 is under the same ownership and responded by stating, “Regarding additional properties owned: We concur with whether it also owned the property on Lot 6. The trust’s tax representative and the appeal form you submitted.” The BTLA asked the trust to verify discrepancy between the [city’s] information regarding other property owned On December 21, the BTLA notified the trust’s tax representative of “a interests of [the landowner] (be the [sic

p. 4 To hold, as the City argues, that the collective multiple fee

rehearing on the “one estate or two” issue was denied, and this appeal followed. ordered an abatement of the assessments on Lot 8. The city’s motion for estate or two” issue. The BTLA denied both motions. Subsequently, the BTLA trust’s appeals. The city moved to dismiss based upon standing and the ‘‘one On August 20, 2009, the BTLA conducted a hearing on the merits of the has consented to be assessed for.

assessment reflects the share of the common tax burden Wal-Mart 4 Walgreen (Lot 6) w[ould] be judged for proportionality separately.” the BTLA ruled that “the assessments challenged by [the trust] (Lot 8) and [trust] appeals and Lot 8 in the Walgreen appeals) was underassessed.” Thus, requiring each taxpayer to rebut the possibility the other property (Lot 6 in the require either [the trust] or Walgreen to be held to an evidentiary standard would be impractical, as well as unduly burdensome and arguably unfair, to Applying this reasoning to the trust’s appeal, the BTLA found that “it

under Sunapee taxpayer whose total estate must be considered to determine proportionality the “‘person aggrieved’” by the tax for the tax years under appeal and was “the Thus, the BTLA ultimately concluded that Wal-Mart, not the landowner, was owner of the land, it was the “‘taxpayer’” and the lot all of the collective fee interests” of the lot despite not being the fee simple and actual occupancy’ of the real estate and ha[d] consented to being taxed for Sunapee Mart appeal, the BTLA found that “because Wal-Mart [was] ‘in the possession similar facts involving the city and Wal-Mart (Wal-Mart appeal). In the Walultimately relied upon its reasoning in a prior order on a separate appeal with question of law on which reasonable minds may disagree.” However, it The BTLA noted that the city’s argument “raise[d] an admittedly close.”

process that is not envisioned by the statutes or case law.

would result in a contorted and complicated valuation

interest . . . comprise the estate that must be considered under building) in the various parcels with some [of the landowner’s]

be taxed for the same.” RSA 73:10 (Supp. 2010). is in the possession and actual occupancy therof, if such person will consent to property shall be taxed to the person claiming the same, or to the person who contest it.” It further relied upon RSA 73:10, which provides that “[r]eal . . . p. 5 Id

assessment on the second. abatement on the first will always require consideration of the

When a taxpayer owns two parcels, then, a request for

to the appellant. correction of errors of valuation whose joint effect is not injurious

property generally in the [city]. Justice does not require the his property is unfavorably disproportionate to the assessment of

on any given parcel unless the aggregate valuation placed on all of taxpayer’s properties, for a taxpayer is not entitled to an abatement

Appeal of Town of Sunapee

Claremont, 98 N.H. 446, 451 (1954). . at 217 (quotation and citations omitted); see Bemis &c. Bag Co. v. land, the [BTLA] must consider assessments on any other of the

RSA 541:13 (2007); see

When a taxpayer challenges an assessment on a given parcel of standard for proving disproportionate tax assessment as laid out in Appeal of taxpayers for both lots. See The city argues that the BTLA erred in failing to apply the correct id. We stated: Sunapee, 126 N.H. at 215. The parties seeking the abatement were the by “taxpayers [who] owned two adjoining lots in Sunapee.” Appeal of Town of

constitutional benefits under these clauses. be universally-applied” to allow every person in the state to receive his they relate to taxation, as aptly put forth in Appeal of Town of Sunapee, must process and equal protection clauses of the New Hampshire Constitution as Town of Sunapee. The city maintains that “the legal obligations of the due

unless the court is satisfied, by a clear preponderance of the from shall not be set aside or vacated except for errors of law, facie lawful and reasonable; and the order or decision appealed questions of fact properly before it shall be deemed to be prima unreasonable or unlawful, and all findings of the [BTLA] upon all any order or decision of the [BTLA] to show that the same is clearly [T]he burden of proof shall be upon the party seeking to set aside

See Appeal of Kat Paw Acres Trust, 156 N.H. 536, 537 (2007). Appeals from decisions of the BTLA are governed by RSA chapter 541. p. 6 Appeal of Town of Sunapee This approach comports with the purpose of the standard laid out in

the taxpayer with respect to Lot 6. See question, the trust was the taxpayer with respect to Lot 8 and Walgreen was In this case, the BTLA did not err in concluding that, for the tax years in

also the taxpayer. consideration of the assessment on any other parcels for which the owner is any given municipality, a request for abatement on one will always require one lot. We now clarify that when a taxpayer owns more than one parcel in case where the taxpayer owns two lots but is the taxpayer with respect to only 6

246, 249 (1998) (finding that leasehold interests are taxable if the leases are Bemis &c. Bag Co. RSA 73:10; Appeal of Reid, 143 N.H. Indeed, it is the taxpayer who bears the burden of paying the tax. See

Accordingly, we decline to adopt such an approach. the tax, i.e., property for which it does not bear any of the burden. evidence of assessments on property that it owns but for which it does not pay We have not had occasion to address the circumstances presented in this proportional and reasonable taxation to require the taxpayer to present of any abatement. It would be contrary to the constitutional requirement of disproportionate tax, it follows that the taxpayer shall be entitled to the benefit pays or is subject to a tax”). Because the taxpayer bears the burden of any Black’s Law Dictionary 1600 (9th ed. 2009) (defining “taxpayer” as “[o]ne who municipality]. which might have been arrived at between the [taxpayer and the taxation.” Id considered regardless of any agreement as to any part thereof. exist without uniformity in the mode of assessment as well as in the rate of [the taxpayer’s] taxable estate in the city and its total tax must be means equal and just.” Id case as to other property in general in the taxing district . . . all of. at 450. “Equality in the burden of taxation cannot on ‘estates’ shall be proportional and reasonable (Const. Pt. II, Art disproportionately higher in relation to its true value than is the. 5) which burden. The standard stems from the constitutional principle “that all taxes present evidence of assessments only on property for which it has a tax individual taxpayer is entitled to an abatement by requiring the taxpayer to

the assessment placed on [the taxpayer’s] property as a whole is

abatement of tax on stock in trade).

Put another way, to determine if p. 7 7

DALIANIS, C.J.