2020-0474, Appeal of City of Berlin

hydroelectric facility (Smith Hydro). It argues that the 2016 median proportionality of the City’s assessment of PSNH’s J. Brodie Smith Administration (DRA) 2017 median equalization ratio to determine the BTLA’s decision to apply the New Hampshire Department of R even ue d/b/a Eversource Energy (PSNH), for tax year 2017. The City challenges the City over - assessed the respondent, Public Service Company of New Hampshire New Hampshire Board of Tax an d Land Appeals (BTLA) determining that the BASSETT, J. The petitioner, City of Berlin (City), appeals an order of the

respondent. Lick, and Trevor J. Brown on the brief, and Derek D. Lick orally), for the Sulloway & Hollis, P.L.L.C., of Concord (Margaret H. Nelson, Derek D.

orally), for the petitioner. Eric A. Maher, and Brendan A. O’Donnell on the brief, and Christopher L. Boldt Donahue, Tucker & Ciandella, PLLC, of Meredith (Christopher L. Boldt,

(New Hampshire Board of Tax and Land Appeals)

No. 2020 - 0474 Board of Tax and Land Appeals

page is: https://www.courts.nh.gov/our - courts/supreme - court 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 email at the following address: editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concor d, 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 p. 2 22 as 2

PSNH filed a motion requesting that the BTLA ado pt the DRA p. 2 2017 ratio “as assessment for tax year 2017 in Berlin. Pr ior to the hearing on the me rits, median equalization ratio to be applied in determining the general level of As to the issue on appeal, the parties disagreed as to the proper DRA

meet its burden of proving otherwise.” PSNH does not appeal that finding. credible and better supported by the record as a whole and [PSNH] did not valuation was $49 million. The BTLA found that the City’s valuation was “more value of Smith Hydro was $34 million, while the City ’s experts testified that its As to the valuation issue, PSNH’s expert testified that the fair market

the proportionality analysis. value of the property, and as to the equalization ratio that should be applied in plant operating in the deregulated mar ketplace, but disagreed as to the market agreed that Smith Hydro’s highest and best use was as a merchant generating only hydroelectric generating facility involved in the appeals. The parties only PSNH property at issue in Berlin was Smith Hyd ro, which also was the p. 2 2017. By the time the BTLA held a hearing on the consolidated appe als, the assessments on property it owned in 47 municipalities during t ax years 2014 abatement appeals filed by PSNH challenging the proportionality of PSNH’s appeal was subsequently consol idated with 1 37 other tax

resulting in an “excessive” assessment and a “disproportionate burden.” substantially greater than the “full and true value” of its propert y, thereby of ap proxima tely $103,704,054. That amount, PSNH asserted, was City’s assessment of $99,763,300 indicated a fair market value for its property PSNH stated that applying the DRA p. 2 2017 median equalization ratio to the market and their impact on the market value of Smith Station.” In addition, included that the City’s assessment “fail[ed] to reflect changes in the energy identified in its abatement application. Its stated reasons for the appeal PSNH’s appeal to the BTLA included the same 15 properties it had

p. 2 2021). an abatement, and PSNH appealed to the BTLA. See RSA 76:16 - a, I (Supp. RSA 76:16 (Supp. 2021). The City’s Board of Assessors denied the request for exceed[ed]” the prope rties’ fair market value and was “disproportional.” See asse rted, among other things, that the City’s assessment “substantially aggregate sum of $99,763,300 and assessed a tax of $3,659,317. PSNH Berlin, including Smith Hydro. The City had appraised PSNH’s property in the for property taxes assessed as of April 1, 2017 on 15 properties it owned in undisputed. In February 2018, PSNH applied for an abatement from the City The following facts are supported by the record or are otherwise

reverse and remand. prepared the p. 2 2017 tax assessment — should apply. Because we agree, w e equalization ratio — the most recent DRA ratio available at the time the City p. 3 3

physical change or undergone other changes affecting value. See RSA 75:8 required to adjust assessments for any properties that have had a material from year to year until the next revaluation; h owever, each year the City is a rt. 6. The City represented that property values are generally carried forward lea st as often as every fifth year.” See R SA 75:8 - a (2012); N.H. CONST. p t. I I, municipality in the State is required to perform a revaluation of all property “at proportional a nd satisfy the requirements of s tate law. As the City noted, every to determine property values and ensure that assessments are reasonably During the BTLA proceedings, the C ity explained the process that it uses

was, therefore, “as a matter of equity, not correct.” ratio], not on the after - the - fact determination,” and that the BTLA’s decision assessed for the 2017 tax year “were paid based on [the DRA 2016 equalization prior tax year, 2016.” The City again objected, asserting that the taxes to apply the DRA’s median ratio for the intended tax year 2017 instead of the adopt the DRA 2017 median equalization ratio, concluding that it was “proper case, t he BT LA announced that it was granting PSNH’s pre - trial motion to On the seventh day of the hearing, before the City began to present its

admission. used for the pur pose of resolving PSNH’s appeal — the C ity agreed to its equalization ratio was — but did not establish whether that ratio should be acknowledged that the exhibit simply reflected what the DRA 2017 median taxpayer in [Berlin] was subject to” for the 2017 tax year. After t he BTLA certified by DRA for 2016,” which was “the equalization ratio that every other asserted, the proper equalization ratio wa s “the median equ alization ratio tax year utilizing the 2016 median equalization ratio. Therefore, t he City established by the DRA until 2018, the City calculated the tax rate f or the 2017 objected, explaining that because the 2017 median equalization ratio was not City to present evidence “that would warrant use of another ratio.” T he City equalization ratio set by the [DRA],” and, therefore, the burden shifted to the “made a good prima facie showing that the ratio should be the median Berlin for tax year 2017, PSNH argued that the exhibit established tha t it had bore the burden of proving the general level of assessment for property in resolving its appeal involving Smith Hydro. Although a cknowledging that it should take administrative notice of the DRA 2017 ratio and use that ratio for 2017 median eq ualization ratio for Berlin. PSNH asserted t hat the BTLA On the first day of the hearing, PSNH offered an exhibit showing the DRA

motion at that time. trial request to adopt a certain asses sment level.” The BTLA did not rule on the burden of proving at trial,” and, therefore, the BTLA should reject PSNH’s “pre assessment in a municipality is a triable issue of fact, which [PSNH] bears the 2017 assessments and tax rate.” It asserted that “[t]he general level of that it “did not use the DRA’s 2017 median equalization ratios wh en setting its evidence of the proportional level of assessment.” The City objected, arguing p. 4 4

ratio.” In addition, the City argues, PSNH submitt ed no evidence regarding the municipality actually used that ratio or stipulated to the validity of that assessment by sole ly relying upon one of the DRA equalization studies unless asserts that a taxpayer “cannot c arry its burden of proving the general level of City’s assessment of Smith Hydro was unlaw ful or unreasonable. The City “after t he fact” 2017 equalization ratio to determine the proportionality of the On appeal, the City argues that the BT LA’s decision to apply the DRA

denied. This appeal followed. assessment of $ p. 4 47.138 milli on.” T he City moved for rehearing, which the BTLA million market value estimate o f Smith Hydro, resulting in “an abated applied the DRA 2017 median equalization ratio of 96.2% to the City’s $49 Berlin’s arguments to the contrary were “without merit.” Accordi ngly, the BTLA dec ision s issued in 2007, “dispositive” on this issue, and concluded that Appeal of Andrews, 136 N.H. 61 (1992), and one of its own administrative BTLA found the decision s of Appeal of City of Nashua, 138 N.H. 261 (199 4), (i.e., that a current year statistic is more valid than a prior year statistic).” The example), but quite another to require a party to prove what should be obvious measures the level of assessment (median ratio or weighted mean, for The BTLA reasoned that “[i]t is one thing to question what statistic best the current tax year’s median equalization ratio, not the prior tax year ’s ratio. position that, under “established law,” proportionality required application of In a written decision issued f ollowing the hearing, the BTLA reiterated its

that the 2017 median equal ization ratio for Berlin was 96.2%. 2017 tax year. It was not until the spring of 2018 that the DRA announced the assessed value of any other property that was subject to revaluation for the The City likewise applied the DRA 2016 equalization ratio of 110.7% in setting equa lization ratio of 110.7% to the adjusted fair market value of the facility. Smith Hydro for the 20 17 tax year, the City app lied the then - current DRA 2016 Accordingly, prior to September 1, when setting the assessed value of

equalization ratio published by the DRA in early 2017. September 1, the current median equalization ratio was t he 2016 median year. See RSA 21 - J:3, XIII (Supp. 2021). F o r the 2017 tax year, as of rat io, which is the equalization ratio published by the DRA earlier in the same (2020). In so doing, the City’s assessors apply the most recent e qualization the assessed value of all property in Berlin to the DRA. See RSA 21 - J:3 p. 4 4, I Prior to September 1 of each year, t he City must determine and submit

assesses the property at that equalized value. the fair market value using the most recent DRA equalization ratio, and propor tional to the valuations for other property in Berlin, the City equalizes utility property annually. To ensure that the assessment for such property is changes to utility property that affect its value, the City generally revalues (2012). As the City’s expert explained, because there are ofte n year - to - year p. 5 5

“shall be limited to questions of law”). BTLA’s findings of fact “shall be final” and any appeal from the BTLA’s decision (Supp. 2021) (providing that, on appeal from a BTLA tax abatement order, the law. See Appeal of Pub. Serv. Co. of N.H., 170 N.H. at 94; see RSA 76:16 - a, V unless the evidence does not support them or they are erroneous as a matter of of City of Nashua, 138 N.H. at 263. We will uphold the BTLA’s factual findings property and the general level of assessment for the municipality. See Appeal make specific factual findings regarding the fair market value of the taxpayer’s 136 N.H. at 64 - 6 p. 5 5. W hen resolving tax abatement appeals, the BTLA must generally assessed in the municipality. I d. at 94; see al so Appeal of Andr ews, higher percentage of fair market value than the percentage at which property is satisfy this burden, the taxpayer must show that its property is assessed at a share of taxes. Appeal of Pub. Serv. Co. of N.H., 170 N.H. 87, 93 - 94 (2017). To preponderance of the evidence that it is paying more than its proportional In a tax abatement appeal, the taxpayer bears the burden of proving by a

are deemed prima fa cie lawful and reasonable. See RSA p. 5 541:13. of Chester, 174 N.H. at 426 - 27; see RSA 541:13. The BTLA’s findings of fact that the BTLA’s decision was clearly unreasonable or unlawful. Appeal of Town 426; see R SA 541:13. The appealing party has the burden of demonstrating such order is unjust or unreasonable. Appeal of Town of Chester, 174 N.H. at errors of law, unless we are satisfied by a preponderance of the evidence that RSA 541:13 (2021). We will not set aside or vacate a BTLA decision except for Appeal of Town of Chester, 174 N.H. 424, 426 (2021); s ee RSA 71 - B:12 (2012); Our standard for reviewing BTLA decisions is established by statute.

assessment in Berlin for the 2017 tax year. not use was sufficient to carry its burden of proving the general lev el of with PSNH that simply introducing a DRA equalization ratio that the City did finder of fact,” concluding that the 2017 ratio should be applied. We disagree the DRA 2016 median equalization ratio; and (3) the BTLA, “in its role as the of the DRA 2017 median equalization ratio; (2) the City i ntroducing evidence of establishing the proportional level of assessment than: (1) i ntroducing evidence controlling legal standar d,” no more was required to meet its burden of showing what that ratio was for Berlin. According to PSNH, under “the notice of the DRA 2017 median equalization ratio and submitted a n exhibit used whe n it requested, prior to the hearing, that the BTLA take administrative that it submitted sufficient evidence as to the proper equalization ratio to be “lacks merit both as a matter of fact and as a matter of law.” PSNH asserts any evidence to support the use of the DRA 2017 median equalization ratio PSNH counters that the City’s argument that PSNH failed to introduce

valuations as of April 1, 2017. at in May 2018 to prove the general level of assessment for tax year 2017, i.e., “whether or how it was proper to use” the DRA 2017 equalization ratio arrived p. 6 6

DRA ratios, we rejected the city’s position that the taxpayers had to introduce equalization ratios should be, no r disclosed how its ratios differed from the B ecause the city neither disclosed to the BTLA what the appropriate

(emphasis added). BTLA to adopt the DRA equalization ratios for those years. Id. at 2 p. 6 66 city during the relevant tax years, the taxpayers “were compelled to urge” the Given the lack of any evidence of the equalization ratios “actually used” b y the difficult burden of proving the general level of assessment. Id. at 26 5 - 6 6. property as sessments,” thereby “unduly magnif[ying]” the taxpayer’s already city had chosen “not to stipulate to the use of any equalization ratio in its them for the tax years at issue to prove disproportionate taxation. See i d. T he produce evidence on the validity of the DRA equalization ratio s relied upon by forth in Appeal of Town of Sunapee by failing to require th e taxpayers to The city argued that the BTLA had misapplied the burden of proof standard set tax years 1988, 1989, and 1990. Appeal of City of Nashua, 138 N.H. at 263. granting property tax abatements for taxes assessed on an office building for In Appeal of City of Nashua, the city appealed the BTLA ’s decision

Appeal of City of Nashua. opposed to the 201 p. 6 6 rati o.” PSNH, however, p osits an unduly broad reading of ratio properly reflected the general level of assessment in Berlin in 2017 as this case, “the BTLA could properly conclude the 2017 median equalization assessment in a community for a given year.” T herefore, PSNH contends, in equalization ratio most reasonably representative of the general leve l of “recognize[d] that the BTLA has the ability and the authority to determine the not agree to stipulate to the use of a particular ratio.” According to PSNH, we this court “laid out the process which governs in the event a municipality does controlling the outcome of this appeal. PSNH asserts that, in that decision, PSNH, like the BTLA, relies primarily upon Appeal of City of Nashua as

value of other properties in the town for the tax year at issue). burden of establishing the actual ratio of the assessed value to the fair market evidence of the equalization ratio used by the town, the taxpayer bore the Town of Milfo rd, 120 N.H. 581, 5 83 (1980) (explaining that, in the absence of further proof of th e general level of assessment. See Milford Props., Inc. v. equalization ratio, or actually use that ratio, the taxpayer must introduce id. However, if a municipality does not stipulate to the validity of the DRA’s used the DRA ratio in the assessment process for the tax year in questio n. See burden — such as when there is uncontroverted evidence that the municipality circumstances, the DRA equalization ratio may be used to meet the taxpayer’s in the municipality “can be difficult to car ry.” Id. at 218. In certain 21 p. 7 7 (1985). The taxpayer’s burden of proving the general level of assessment generally assessed for tax purposes. Appeal of Town of Sunapee, 12 p. 6 6 N.H. 214, proportion of fair market value at which property in the municipality is The general level of assessment for a given tax year represents the 7

in Berlin. equalization ratio that was not applied for tax year 201 p. 7 7 to any other taxpayer result in determining the merits of PSNH’s abatement request based on an introduce further proof of dis proportionality). To conclude o therwise would indicate its acceptance of the accuracy by actual use,” the taxpayer must municipality does not stipul ate to the validity of the DRA ratio “or otherwise town for that year”); Stevens v. City of Lebanon, 122 N.H. 29, 33 (1982) (if a actual ratio of the assessed value to fair market value of other properties in the in the tax year at issue, it was incumbent upon the taxpayer “to establish the (where there was no e vidence that the town used an equalization ratio of 72% other property in Berlin in 2017. See Milford Pr ops., Inc., 120 N.H. at 582 - 83 at a different pe rcentage of fair market value than the percentage appl ied to to prove, by a preponderance of the evidence, that Smith Hydro was assessed fact” 2017 median equalization ratio of 96.2%. Thus, the burden was on PSNH ratio of 110.7%. It was undisputed that the City did not use the DRA “after the assessments for tax year 2017, it applied the DRA 2016 median equalization accordance with Appeal of City of Nashua, the City disclos ed that, in setting proportionality all taxpayers must be assessed at the same ratio.”). Rather, i n proportionality, w e have consistently held that in order to achieve See Appeal of Andrews, 136 N.H. at 64 (“When asked to consider taxpayer offering evidence of an alternative DRA ratio that the municipality did not use. that the taxpayer can meet its burden of proving disproportionality simply by Appeal of City of Nashua does not support PSNH’s position in this case

representative of the general level of assessment.” Id. at 266 - 6 p. 7 7. fact finder, “shall determine the equalization ratio most reasonably level of assessment” and, in the event of a disparity, the BTLA, in its role as that another ratio, perhaps the [DRA] rati o, more closely reflects the general (emphasis added). In such a circumstance, t he taxpayer, then, “may offer proof [that] ratio, as well as the meth odology by which it computed [that] ratio.” Id. its own uniform ratio . . ., a municipality must make a good faith offering of equalization ratio in a tax abatement case before the BTLA and, “[i]f it employs Thus, we held that a munic i p a lity must disclose its preferred

appraise property fairly for taxation purposes.” Id. to ensure proportional assessments, it will hav e violated its obligation to We explained that “[i]f a municipality does not use a uniform equalization ratio equalize tax assessments to insure proportionality.” Id. (quotation omitted). did not relieve the city “of i ts preexisting obligation to use some method to however, that the taxpayer’s burden of proving the general level of assessment an expensive duplication” of the DRA’s ratio studies. Id. at 266. W e noted, 266 - 6 p. 7 7. Such further evidence, we surmised, would have simply “necessitated further proof of the general leve l of assessment beyond the DRA ratios. Id. at p. 8 8

J:3, X III (Supp. 2021). public taxes that may be apportioned” between municipalities “shall be equal and just.” RSA 21 preceding April 1. The purpose of the DRA’s annual equalization studi es is to ensure that “any no DRA equalization ratio is based on every sale occurring during the twelve months immediately equalization studies run from October 1 to September 30. See RSA 21 - J:9 - a, I (2020). Therefore, year. A tax year runs from April 1 to March 3 1. See RSA 76:2 (Supp. 2021). However, the DRA’s We note that the DRA’s equalization studie s do not precisely coincide with any particular tax 1

argues that the City’s use of the DRA 2016 ratio rendered the City’s 2017 tax Porter v. Town of San bornton, 150 N.H. 363, 369 (2003). To the extent PSNH Trust v. Town of Wolfeboro, 159 N.H. 734, 739 (2010) (quotation omitted); see is the linchpin in establishing entitlement to a petition for abatement.” LLK good assessing practice.” However, “[d] isproportionality, and not methodology, equalization ratio for assessment purposes in 2017 is “unteth ered fro m . . . PSNH asserts that the City’s methodology of using the DRA 2016 median

evidence supporting an agency’s factual findings presents a question of law). Demers Agency v. Widney, 155 N.H. 65 p. 8 8, 661 (2007) (sufficiency of the decision was unsupport ed by sufficient evidence in the record); see also Forest Prods., Inc., 1 28 N.H. 352, 356 - 57 (1986) (determining that the BTLA’s the BTLA’s decision, which presents a question of law. See Appeal of Clark Hill issue before us is whether there is sufficient evidence in the record to support BTLA’s determination. Although findings of fact by the BTLA are final, the assessment in Berlin, we reject its assertion that we owe deference to the DRA 2017 ratio. Given that PSNH put forth no evidence on the general level of 2016 ratio reflected the general level of assessment less accurately than the propriety of using any particular DRA equalization ratio, or whether the DRA either expert about the general level of assessment in Berlin in 2017, the during the cross - exam ination of the City’s experts, PSNH did not question submitting the assessed value of property in Berlin to the DRA. Nonetheless, was known as of the April 1 assessment date and the September 1 deadline for and explain ed that the DRA 2016 ratio was used because it was the ratio that ratio the City used when setting the 2017 assessment for property in Berlin, determine such ratios. T he City’s expert s testified concerning the equalization topic of equalization ratios and, specifically, the process used by the DRA to PSNH’s expert testified that she had limited knowledge on the general

level of assessment in Berlin or support ing its preferred equalization ratio. with the City that PSNH failed to introduce any evidence regarding the general general level of assessment. However, we have re viewed the record and agree present additional evidence” if the City introduced evidence regarding the for property in Berlin for tax year 2017 and expressly “reserve[d] [its] right to acknowledged that it bore the burden of proving the general level of assessment not establish the propriety of a particular ratio for Berlin. Indeed, PSNH 1 median equalization ratio, the BTLA expressly noted that, standing alone, it did burden. W hen agreeing to admit PSNH’s exhibit showing the DRA 2017 We conclude that PSNH did not offer sufficient evidence to meet its p. 9 9

concurred. M AC DONALD, C.J., and HICKS, HANTZ MARCONI, and DONOVAN, JJ.,

further proceedings consi stent with this opinion. property in general in Berlin was unjust and unreasonable. We remand for was disproportionately higher in relation to its true value than to other median equalization ratio to determine whether th e tax placed on Smith Hydro Accordingly, w e hold that the BT LA’s decision to apply the DRA 2017

taxation at the expense of the other taxpayers” (quotations omitted)). should not be relieved from [its] proportionate share of the common burden of “upon strictly equitable principles only, and equity requires that [a taxpayer] v. Carroll, 84 N.H. 428, 431 (1 p. 9 930) (explaining that abatements are granted whole [is] no ground for granting a petition for abatement.” Bretton Woods Co. year assessment s illega l, “a complaint that the assessment [is] illegal as a