Vermont Supreme Court affirms valuation of hydroelectric facility in Bellows Falls
BELLOWS FALLS >> The Vermont Supreme Court affirmed a local decision to rely on a New Hampshire tax expert's valuation of the TransCanada hydroelectric facility on the Connecticut River.
Transcanada argued before the Supreme Court that Windham County Superior Court Judge John Wesley "erred when it relied on testimony of the Town's expert witness."
During the trial in superior court in Brattleboro between the town and Transcanada, both parties presented expert testimony as to the value of the facility, ranging between Transcanada's $84,000,000 to the town's estimate of $130,000,000.
"The trial court found (Transcanada's) $84,000,000 appraisal to be an 'incredibly low value' that was 'irreconcilable with the great weight of evidence and testimony,'" noted the Supreme Court. "The court felt that '(i)t strains reasonableness to insist that the current value is more than twenty million dollars less than what it was in 2001,' and that because (Transcanada's) appraisal was 'well below any listed value of (the facility) for more than a decade prior to 2012,' it 'undermine(d) the defensibility of (Transcanada's) position as well as its expert's credibility.'"
Windham Clounty Superior Court Judge John Wesley concluded that the town's $130,000,000 appraisal was "a supported and reliable estimate of the fair market value of the facility."
"We will not set aside the trial court's findings of fact unless they are clearly erroneous ... and we will affirm its conclusions where they are reasonably drawn from the evidence presented," noted the Supreme Court in its decision, which was issued on Sept. 9.
Chip Stearns, the municipal manager for Rockingham and Bellows Falls said he was relieved by the decision, but it might not make much difference in the long run.
"From one standpoint, the decision is good, because it helps the town in the budget process," said Stearns. "But the decision resulted in being as close as you can get to the way we were taxing it already."
The dispute over the plant's valuation begain in 2012, when the town of Rockingham listed it on the grand list at $108,110,000, the same value at which the facility had been listed the previous two years. Prior to Transcanada's purchase, determining the dam's value was hotly disputed because of "difficulties in valuing a hydroelectric facility in a deregulated electrical power market."
George Sansoucy, a registered professional engineer in New Hampshire and a certified real estate appraiser in several states, including Vermont, prepared an appraisal of the facility, with two different values utilizing two different methods — $116,417,250 and $142,287,750.
"After reconciling the income and sales values, Sansoucy concluded that the fair market value of the facility on April 1, 2012 was $130,000,000, of which $108,495,400 was attributable to the Town," noted the Supreme Court. "The experts' opinions were complex, and taxpayer has made several challenges to the court's acceptance of the Town's expert's opinion. Most of the issues taxpayer raises on appeal pertain to specific inputs or assumptions made by Sansoucy in each of the two methods of valuation he employed."
However, noted the Supreme Court, "It is taxpayer's burden to persuade this Court that the facility is over assessed, and this burden is not met by 'simply impugning the (Town's) methods or questioning its understanding of assessment theory or technique. To prevail, taxpayer must demonstrate that valuation is arbitrary or unlawful. The resolution of conflicting evidence is left to the discretion of the trial court."
In this case, Transcanada failed to persuade the court. "We conclude that the trial court's reliance on Sansoucy's estimate of the cost of relicensing, and its rejection of taxpayer's expert's approach, was within its discretion."
While the Supreme Court did disagree with Transcanada's contention, it lowered the value of the facility from $130 million to $127 million, with $108,495,400 taxable by the Town of Rockingham. The difference in the taxable amount is due to the fact that portions of the dam's water storage are in Weathersfield and Springfield.
The dam in Bellows Falls has been in continuous operation since 1928, and is one of five hydropower dams owned by Transcanada along the Connecticut River. It produces, on average, 258,700 megawatt hours per year. Transcanada bought the dam from USGen New England in 2005.
Transcanada is in the process of trying to sell its assets on the Connecticut River and the Deerfield River. The purchase price for the 13 dams in Vermont is estimated to be about $1 billion. The state considered it for a while, but backed off on the purchase, especially because it would have meant a loss of tax revenue to the towns where the facilities are located.
TransCanada is buying Columbia Pipeline Group for $10.2 billion and is looking to sell its Northeast generation assets in order to finance the purchase. According to the Vermont Department of Public Service, Transcanada's assets include 16 dams producing 579mw, three gas plants (one each in Rhode Island, New York, and Pennsylvania) and a wind facility located in Maine.
Bob Audette can be contacted at 802-254-2311, ext. 160.
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