Property Tax Assessments

Property Tax Assessments

October 01, 2004

Property tax assessments withstood challenges in two states.

In one case, the owner of a landfill in Virginia complained that the county should not have assessed the value of his property by discounting the projected net income the landfill was expected to earn over time.  He argued that this was the way to value his entire company, but not the landfill.  For one thing, he said the assessor’s method also took into account the value of permits he needed to run the business.  There is no property tax on intangibles.

The Virginia Supreme Court upheld the assessment in late September.  It cited a treatise on property valuations suggesting the income forecast method is a reasonable approach.  Comparable sales could not be used in this case because such sales are hard to find.  The court disagreed that discounting expected income took into account any separate value for the permits.  The case is Shoosmith Bros. v. County of Chesterfield.

Separately, USGen New England failed in its effort to set aside a $102 million value that a town in Vermont put on a hydroelectric facility on the Connecticut River.  The plant was built in 1928.  USGen bought it in 1999 from the New England Power Company.  The plant straddled the river, with part of it in Vermont and part in New Hampshire. Vermont claimed the plant was worth $102 million and allocated 90% of the value to Rockingham, Vermont for purposes of collecting property taxes.  The town used the income forecast method to assign a value.  USGen wanted to throw out the testimony of one of three valuation experts — a power market expert on whom the town relied — on grounds that his use of one year of electricity price data to project electricity prices for the next 20 years was unreasonable.

The three experts who testified at trial assigned widely disparate values to the plant: $32.7 million, $76.5 million and $102.6 million.  The Vermont Supreme Court declined to set aside the $102 million value, saying the trial judge who originally heard the case could rely on the expert he chose.

The case is USGen New England v. Town of Rockingham.  The court released its decision in mid-September. 

Keith Martin