Boston Gas Co. v. Board of Assessors
941 N.E.2d 595
Mass.2011Background
- Boston Gas Co. sought abatements for its 2004 Boston personal and real property taxes; assessments were denied.
- Appellate Tax Board (board) adopted a valuation for personal property using equal weight to net book value and RCNLD, accepting a fair cash value above the assessed value.
- Real property (Commercial Point) was valued by the board as not credibly valuable beyond the assessed value due to insufficient evidence.
- Taxpayers appealed directly; issues centered on valuation methodology, EBITDA analysis, tax factors, witness credibility, and real property valuation.
- The court remanded on remand-specific issues while affirming the board on others, including the use of a mixed net book value/RCNLD approach.
- Key regulatory context: DPU policy shift away from carry-over rate base and the potential for acquisition premiums to be recoverable in certain cases.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether equal weighting of net book value and RCNLD is permissible | Keyspan argues only net book value should apply. | Board properly recognized regulatory changes allowing non-net-book-value methods. | Permissible to use mixed valuation (net book value + RCNLD). |
| Whether EBITDA analysis and its capitalization were properly performed | EBITDA data and adjustments (e.g., 2001, 2003) were misapplied. | Board’s EBITDA approach is sound but requires refinement. | Remanded for further consideration of EBITDA calculations. |
| Use of a tax factor in the income capitalization | Tax factor should be used rather than deducting taxes from EBITDA. | Tax factor is not mandatory; board may proceed without it. | Remanded for board to address the tax-factor issue. |
| Weighting and credibility of evidence, including comparable sales and intangibles | Comparable sales should reflect intangibles; board erred in weighting. | Board’s discretion on credibility and weight is proper. | affirmed on credibility/weighting except where remand applicable. |
| Value of real property (Commercial Point) and adequacy of evidence | Real property had credible valuation evidence suggesting higher value. | Record lacked sufficient credible evidence to deviate from assessed value. | Real property value affirmed as undisturbed. |
Key Cases Cited
- Boston Gas Co. v. Assessors of Boston, 334 Mass. 549 (1956) (defined fair cash value as fair market value)
- Koch v. Commissioner of Revenue, 416 Mass. 540 (1993) (substantial evidence standard for board decisions)
- Tennessee Gas Pipeline Co. v. Assessors of Agawam, 428 Mass. 261 (1998) (substantial evidence review; special circumstances for value methods)
- New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456 (1981) (scope of review; deference to board's valuation choices)
- Montaup Elec. Co. v. Assessors of Whitman, 390 Mass. 847 (1984) (special circumstances permitting non-net-book-value valuation)
- Stow Mun. Elec. Dep’t v. Department of Pub. Utils., 426 Mass. 341 (1997) (acknowledgment of regulatory policy shift affecting valuation)
- Attorney Gen. v. Department of Telecomm. & Energy, 438 Mass. 256 (2002) (recognizing regulatory policy change in rate plans)
- Assessors of Lynn v. Shop-Lease Co., 364 Mass. 569 (1974) (tax factor concept in income capitalization)
- Assessors of Lynnfield v. New England Oyster House, Inc., 362 Mass. 696 (1972) (tax factors in capitalization; rationale for including taxes pre- or post-)