2006 Summer, 16. NHBJ EDITOR'S AWARD: Paying for What You Can See.

AuthorBy: Denise Jobe

New Hampshire Bar Journal


2006 Summer, 16.

NHBJ EDITOR'S AWARD: Paying for What You Can See

New Hampshire Bar Journal Volume 47, No. 2, Pg. 16Summer 2006NHBJ EDITOR'S AWARD: Paying for What You Can SeeBy: Denise JobeDeveloping Standards to Govern View Tax Assessments in New Hampshire


Bubbling at the surface of New Hampshire's tax issues, is a controversy regarding one of its greatest assets - its land. Real property is New Hampshire's greatest source of revenue and New Hampshire is one of the only states that relies almost exclusively on property taxes to sustain its municipal obligations.1 Due to the enormous impact property taxes have on New Hampshire towns and taxpayers, one of the state's greatest challenges is fairly and equitably administering this revenue system.

Inherent in the difficulty of establishing standards for assessing real property is the fact that each parcel of land is unique. In comparing the process of assessing a tax on real property with the registration of a vehicle, one can see the problem more clearly. When one has the ability to input into a computer the age, make and model of a vehicle, and have the computer generate a market value on which to base the tax, the probability of variability is greatly diminished.

Unlike assessing a tax on a vehicle, however, property tax assessment is not amenable to a simple computer model. In valuing real property, subjective judgments are unavoidable. This subjective feature of tax assessment is especially prominent when a property has a landscape that overlooks pastures, hills or mountains - a view. In this situation, an assessor employs his subjective professional judgment to implement an adjustment multiplier in order to capture what he perceives to be the increase in market value attributed to the unique features of the land. The arbitrary and undocumented nature of these multipliers has been the subject of recent litigation in both the Superior Court and before the Board of Tax and Land Appeals (BTLA).

This article will focus on recent challenges to town-wide assessment procedures and, in particular, to the ability of assessors to implement these adjustments in a uniform manner. I will discuss how the Department of Revenue Administration (DRA) is attempting to meet this challenge through the development of a 'manual of manuals,' to ensure the uniformity of assessments by mandating that assessing companies clearly and concisely document and justify their work. I will discuss whether this documentation will adequately address perceived inequalities in view tax assessments. I will also discuss the current debate between assessors, some of whom believe that the current DRA rules are sufficient to ensure equality and fairness, and property owners, some of whom who believe that more stringent standards are needed to justify the values placed on property as well as provide taxpayers the tools with which to evaluate their assessments.

Ultimately, I will conclude that, although the additional documentation will benefit taxpayers, if the assessing companies refuse to comply with the new standards, taxpayers will still be compelled to demand hearings before the BTLA and superior court to clarify, and correct, their tax assessments

Historical Perspective

The Framers of the New Hampshire Constitution understood the importance of maintaining a system of property taxation that is credible, efficient and fair. The New Hampshire Constitution states, "[t]here shall be an evaluation of the estates within the state taken anew once in every five years, at least, and as much oftener as the general court shall order." 2 This provision further states: "[a]ll taxes are to be equal and proportional."3 The Act of 1833 increased the understanding of the meaning of these constitutional words and developed a true rule which has been followed ever since. 4 The Act clarified the Framers' words 'an evaluation of the estates' to mean 'appraisals of property to be taxed at its fair value, so that proportional taxes might be laid.' 5 Even a century later, the New Hampshire Supreme Court recognized that "[e]quality in the burden of taxation cannot exist without uniformity in the mode of assessment as well as in the rate of taxation." 6 Yet, without any comprehensive statutory framework or clearly delineated standards, the Framers' 200 year old mandate has not been fulfilled, especially concerning view tax assessments.

The Decision that Rocked the DRA's World

The issue of equal and proportional taxation came to a head in 1999 in Sirrell v. State when a group of taxpayers prevailed at the superior court level in the infamous 'Galway decision'.7 Judge Galway ruled that the property tax system was constitutionally flawed.8 He stated that the constitutional mandate to reappraise at least every five years is clear, and the evidence presented at trial showed that 71 out of 259 towns had not had revaluations in over six years. 9 The court found that "without a full revaluation of statewide property there cannot be an equal and proportional base of property values on which to assess a tax, and no guarantees of equal valuations of property across taxpayers."10 It ordered the state to return $880 million to New Hampshire taxpayers.11

On appeal, the Supreme Court agreed that the taxation system is flawed.12 However, the Court concluded that there was not a systematic pattern of disproportionate taxation.13 Therefore, the state ultimately prevailed. However, the decision raised serious issues regarding the sustainability of the current tax assessment system.14 It encouraged the state to implement appropriate enforcement measures to ensure that each municipality assesses property within its borders every five years, as required by the constitution.15

The Court also identified significant shortcomings in New Hampshire's assessment procedures, notably the lack of standards for local assessments and the lack of verification of data collected at the local level.16 The Court heard evidence that different methods may be used to update property values within each community.17 Finding few written guidelines and quality control mechanisms, the Court noted that the DRA does not have comprehensive auditing procedures in place to verify that assessments are being performed correctly and accurately at the local level.18 Expert testimony indicated that all local data should be validated through audit procedures, and testimony from experts on both sides of the issues agreed that the DRA needs to perform these audits.19 The Court encouraged the state to continue to address these issues through good faith efforts of the executive and legislative branches of government.20

The lack of guidelines becomes especially problematic when assessing property with unique features, such as a view. Without guidelines or standards, methods for evaluating these types of properties have varied among assessing companies. This has led to inconsistency between and within assessing companies, taxpayer confusion and dissatisfaction, and a series of agency and court orders urging the development of uniform assessment procedures.

Current New Hampshire Law

In an effort to address the concerns expressed by the Court in Sirrell, the legislature created the Equalization Standards Board (ESB) and the Assessing Standards Board (ASB).21 Both remain under the authority of the DRA. The legislature also responded by amending the statute which requires the appraisal of property, RSA 75. Specifically, the legislature added section 8 (a), which creates a requirement that the selectmen or assessors of each municipality reappraise all real estate so that assessments are at the full and true value at least as often as every fifth year.22

The legislature delegated to the selectmen or...

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