Madison Paper Industries v. Town of Madison
2021 ME 35
| Me. | 2021Background
- MPI owned a Madison paper mill and two hydroelectric plants as of the April 1, 2016 valuation date; the mill was operational and profitable on that date but its owners announced closure in March 2016 and operations ceased in May 2016.
- The Town assessed the mill and Madison portion of the hydros as an operating whole; Town valuation (after BETE exclusions) resulted in taxable hydro value of $34,292,500 and taxable mill value of $38,070,181 (total assessment ~$72.36M before BETE adjustments).
- MPI hired Duff & Phelps; its appraisal valued the mill on a liquidation (sales-comparison) basis at $2,675,000 and the hydros at $31,787,000; Town relied on Michael Rogers (MRS) using cost, income, and sales approaches and applied substantial economic obsolescence to the mill.
- The State Board of Property Tax Review rejected MPI’s appraisal as not credible, found the mill’s highest and best use was its current use as an operating mill, rejected a double-counting claim, and held the taxable hydro assessment was within 10% of MPI’s proffered value under 36 M.R.S. § 848-A.
- Somerset County Superior Court affirmed the Board; the Maine Supreme Judicial Court affirmed, holding the Board’s factual findings were supported by competent evidence and no legal errors were shown.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Highest and best use of mill assets | Liquidation/salvage value (sale restrictions irrelevant) | Current use (operating mill) is a permissible highest and best use given physical/market facts | Board’s factual finding that current use was highest and best use upheld; not legal error |
| Valuation method / expert credibility | Duff & Phelps’ sales-comparison liquidation value should control | Town’s Rogers used cost approach (cost less obsolescence) and was more credible given owner restrictions | Board reasonably credited Rogers and rejected Herman’s report; MPI failed to meet burden |
| Double-counting energy value | Hydros’ energy value was counted twice—once in hydros and again as avoided cost in the mill | Mill was valued using cost approach (not income), so avoided-cost was not double-counted in mill valuation | No double-counting; Board’s finding supported by evidence |
| Application of § 848-A (10% rule) | Compare MPI’s appraised total hydro value to Town’s total (including BETE) showing >10% deviation | Compare taxable values (exclude BETE); taxable hydros were within 10% so defense applies | Board correctly compared taxable values excluding BETE; difference within 10% and defense applies |
Key Cases Cited
- Angell Fam. 2012 Prouts Neck Tr. v. Town of Scarborough, 149 A.3d 271 (Me. 2016) (review of Board findings must be supported by competent evidence)
- Glenridge Dev. Co. v. City of Augusta, 662 A.2d 928 (Me. 1995) (municipal valuation presumed valid)
- Delta Chems., Inc. v. Town of Searsport, 438 A.2d 483 (Me. 1981) (taxpayer must prove assessed valuation manifestly wrong)
- Cent. Me. Power Co. v. Town of Moscow, 649 A.2d 320 (Me. 1994) (standard for proving assessors’ judgment irrational)
- City of Waterville v. Waterville Homes, Inc., 655 A.2d 365 (Me. 1995) (taxpayer must present credible evidence of value)
- Weekley v. Town of Scarborough, 676 A.3d 932 (Me. 1996) (just value means market value)
- Luce v. Me. Fid. Life Ins. Co., 323 A.2d 589 (Me. 1974) (market value determined by highest and best use)
- Emera Maine, 174 A.3d 321 (Me. 2017) (appellate review of Board factual findings)