Property Taxes: Down for the Big Guy, Up for the Rest of Us

Ports

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A bill recently passed by the N.H. House that would change how utility poles are assessed in value and taxed could cost municipalities hundreds of thousands of dollars in revenue, according to area local city and town managers. Photo by Rich Beauchesne/Seacoastonline
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  By Erik Hawkins
  ehawkins@seacoastonline.com

  Posted Mar. 29, 2015 at 2:01 AM
  
  

  CONCORD — A bill recently passed by the House of Representatives seeking to change the way that utility poles are assessed in value is raising eyebrows in municipalities across the Seacoast as city and town managers worry about fair taxation and a possible property tax revenue shortfall.

  According to some officials, towns and cities could lose thousands in revenue.

  House Bill 547 would change the definition of “replacement cost,” which is the current basis for pole assessments, to “the actual cost of the pole or conduit including the labor cost of installation less depreciation calculated on a straight-line basis for a period of 30 years with a residual value of no less than 20 percent.”

  The bill would enable telecommunications companies, and chiefly FairPoint Communications, to depreciate the value of their poles and conduits to 20 percent of their market value.

  “Straight line depreciation really has nothing to do with the actual market value of a pole,” said Dover City Manager Mike Joyal on Thursday, adding that most poles in Dover are more than 30 years old to begin with, and thus would have an almost negligible assessed value.

  “(The bill) seeks to unfairly reduce property taxes exclusively for the benefit of the private for-profit telecommunications industry while shifting that burden on to all other property taxpayers in the community,” Joyal continued. “It proposes to create an exception for how poles and conduits owned by telecommunication companies are assessed, which ultimately will allow them to avoid paying their fair share of property taxes based upon fair market value.”

  Joyal added that if the bill is adopted, it would amount to a loss to Dover of more than $900,000 in assessed value.

  Assessor Will Corcoran said in a letter to members of the New Hampshire House that the proposed assessing methodology “yields the lowest possible value of any methodology.”

  According to Corcoran, the bill would exempt 75 percent of the utility poles in Dover from property taxes.

  Exeter Town Manager Russ Dean has similar concerns. According to the town’s assessing department, the bill would amount to a loss of nearly $2.8 million in valuation in Exeter, and a loss in property tax revenue of between $73,000 and $105,000.

  The bill in its original form would have exempted utility poles completely, but Joyal said that, even as amended, the bill is far from a compromise.

  “That’s like saying that if someone tries to walk out of a restaurant without paying, and then offers to pay half the bill when he gets stopped, that’s a compromise,” he said.

  The New Hampshire Municipal Association has been outspoken in its opposition to the bill. The NHMA, in speaking against HB 547 before the House voted on it, called the bill “a giveaway of taxpayer money to a few influential businesses. It effectively gives certain for-profit businesses a property tax exemption simply because they want it. It is patently unfair and unconstitutional.”

  NHMA officials in a March bulletin following the House vote even asserted that many legislators who voted in favor of it were likely confused.

  District 18 Rep. Frank Heffron, D-Exeter, voted in favor of the bill, but told Seacoast Sunday last week that he was “confused” about the bill’s intent.

  District 36 Rep. Patricia Lovejoy, D-Stratham, one of the bill’s co-sponsors, said on Friday that after a long-standing moratorium on taxing utility poles ceased in 2011, multiple methods of valuation began to be used and resulted in confusing and unfair assessments from town to town. This legislation, she said, is intended to create a uniform methodology.

  “The Legislature sort of created this mess, and those of us who worked on this bill saw it was a way of cleaning it up,” she said.

  Poles and conduits owned by electric companies have been taxed by host municipalities since 1905. However, identical and sometimes the same poles owned by phone companies were not taxed. If poles were jointly owned by both types of utilities, the electric portion was taxed and the telephone portion was not.

  The law was changed several times and phone poles were eventually taxed in 1999, but exemptions were consistently renewed until July 2011, when a new state law took effect that ended exemptions for some utility companies, including gas providers and telecommunications companies. The change was supported by the N.H. Municipal Association, which issued a memo to member communities stating that elimination of the pole exemption would "result in a tax reduction for almost all taxpayers."

  However, the state Public Utilities Commission in an order dated Dec. 28, 2012, authorized FairPoint Communications to impose a surcharge on its Internet and phone customers based solely on new property taxes upon its poles.

  Lovejoy said that because under HB 547 poles would not be allowed to depreciate to less than 20 percent, “no pole is going to be useless.”

  Lovejoy is the only Democratic co-sponsor of the bill, which has eight other co-sponsors. Rep. Patrick Abrami, R-Stratham, is among HB 547's sponsors.

  The bill was voted “ought to pass” in the House on March 3 by a vote of 205 to 162, and will go to the Senate Ways and Means Committee for a hearing on Tuesday, March 31 at 9:10 a.m. in Room 103 at the State House.

  New Hampshire’s cross-over date is April 4, when bills passed by the House will be voted on by the Senate, and vice versa.