Pole Tax Suits Continue Unabated for Multiple Towns

CHESTER – At its most recent meeting, the board of selectmen agreed to continue, with 139 other towns across the state, a lawsuit involving the state’s primary telephone utility, Fairpoint, and its claims that the company should not have to pay property taxes on utility poles.

It’s been a contention between telephone utilities and one town or another for about 14 years, making its way through the courts and amassing issues all the while. The town is being represented in the matter by Donahue, Tucker and Ciandella, PLLC, which, with four other law firms across the state, is handling the defense of Fairpoint’s civil suits against numerous municipalities. These include Hampstead, Derry and Londonderry among others.

Donahue, Tucker and Ciandella recently sent letters to their municipal clients asking whether they would help fund the preparation of an amicus brief in Concord’s appeal of a recent Merrimack County Superior Court case dealing with Fairpoint’s challenge of the constitutionality of the city’s pole tax.

And though Concord isn’t Chester, all towns involved in the dispute are watching Concord’s case closely or are wrapped up in parallel cases. While the matter can be inundating, the lawsuit’s origins can be traced to a 1999 suit between the City of Rochester and Verizon, which was then the primary landline utility in the state and is now Fairpoint. Following state law, Rochester sought property tax payments from the private poles the company used in the public right of way, and the matter ended up in court. The city won that case, but various permutations of it have since arisen, including Verizon’s contention that if it were to pay such taxes, then all utilities should pay them equally, something that doesn’t always happen.

Also involved is the contention that the pole tax is unfair because it taxes landline utilities and not wireless utilities, but this isn’t universally agreed on. Fairpoint has also cried foul with the variability with which different municipalities value the infrastructure.
Attorney Kate Miller with Donahue, Tucker and Ciandella explained that each year more and more cases dealing with a variety of similar legal issues get consolidated.

Now there are two primary cases, one between the City of Concord and Fairpoint and the multi-municipality case involving Chester. In Chester’s suit, Fairpoint argues that the tax assessment is unconstitutional because its infrastructure is taxed twice. The company’s use of the public right of way is taxed as well as its poles and conduits.

Until last year, telecommunications poles and conduits were tax exempt, but a 2011 decision by the state legislature let that exemption expire. This decision initially prompted Chester and many New Hampshire towns to send tax bills out to the telecommunications companies for the first time.
Then last year, after its failure at the State House to keep the tax exemption on the books, Fairpoint individually sued 139 municipalities across the state in a tax abatement effort.

While there are Fairpoint poles in Chester, most of the town’s telephone service is handled by Granite State Communications, which has also publicly opposed the tax and has a parallel case in the works.

The case involving Chester is in the discovery process, explained Miller, with both sides sending lists of questions to the other side to better understand the issue as it goes forward.
Miller expects the next motions or dispositions to be filed starting in 2014, to help resolve the legal and constitutional questions surrounding the matter, she said.

It’s a small financial matter for Chester to continue with the suit, between $600 and $900.
That is a fraction of the revenue that those poles could bring to the town, said selectman chair Steph Landau. All selectmen agreed that it made sense to continue with the suit.

When Chester sent out tax bills last year, the potential revenue was approximately $45,000. FairPoint has about $200,000 in poles in town, leaving it with a supplemental tax bill last year of $4,932. Granite State has $1,620,900, resulting in $39,971 in costs to the town.

When the pole tax bills went out last year, Granite State Communications’ Chief Operating Officer Bill Stafford said that not only did he think the tax was patently unfair, but that unfortunately the expense would be passed on directly to customers, as the increase it represented over the previous year’s tax bills was too large to absorb.

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