PUTNEY — TransCanada has launched a campaign of litigation against a number of towns in Vermont, most recently Putney, using data from a state revaluation to assess the energy giant's local property tax obligations.
At its Feb. 11 meeting, the Selectboard agreed to take a “wait-and-see” approach, asking Town Attorney Richard Coutant to limit his hours spent on the case.
The hydroelectric utility's lawsuit, filed last September in Vermont Superior Court, Windham Civil Division, is in the very early stages of “a very prolonged process,” Coutant told board members.
“The issue here involves easement rights owned by [TransCanada] in Putney. Their flowage right gives TransCanada the right, within certain parameters, to flood land,” Coutant said.
TransCanada's operating license requires the company to purchase the easements all along the Connecticut River, including approximately 1,243 acres in Putney - land that was historically left unvalued until the 2014 grand list.
In 2009, the state legislature ordered a reappraisal of TransCanada's eight hydroelectric facilities in Vermont, as well as the Somerset Reservoir. Under the purview of the state Department of Taxes, Lancaster, N.H.–based appraiser George E. Sansoucy performed the revaluation in 2010.
In the case of Putney, the land and the easements were valued at $1,864,300 using the Sansoucy appraisal. Last year, the town collected $38,550 in taxes from TransCanada.
Coutant said that TransCanada argues that while the company floods only about 20 to 30 acres, it should pay taxes only for the acreage of easements actually used.
Town Lister Kathleen O'Reilly-Lawrence explained that the total assessment on a piece of land is made according to the “highest and best use” of the property.
When an easement like flowage rights detracts from the value of the property, that easement can be valued at the difference.
Coutant, who has been involved in similar cases across the county, said he was uncomfortable offering concrete opinion on the future of Putney's case. While similar reappraisals have happened in the past regarding land used for dams, the circumstances of each town's flowage easements make each case unique.
Sansoucy is aware of the litigation the appraisal has brought to Waterford, Newbury, Barnet, Vernon, Rockingham, Whitingham, Somerset, Dummerston, Stratton, and Concord.
Coutant said the consultant insists that the easements are priced at fair market value, and argues that TransCanada needs those easements to remain in operation and therefore must retain the rights to them.
Potential expenses
Town finances are at stake in the lawsuit, which Coutant guessed could cost approximately $10,000 in legal fees to take through trial.
A lengthy litigation process could mean collecting another year of taxes from TransCanada's easements, with the possibility of a judge demanding all of the taxes from unused land be repaid to TransCanada with 12 percent interest. For Putney, this would mean almost $80,000.
Plus, he added, “the state of Vermont has no obligation, and has told me they have no inclination, to adjust the town's education grand list, if that happens.”
On the other hand, the state has shown willingness to support its state appraisals and local Vermont towns.
The state provided towns legal support in the past; Waterford was reimbursed by the state for $7,040.64 in legal fees in November of last year. But Coutant said it was unlikely that the legislature will continue those appropriations.
Pretrial schedule
TransCanada must disclose its own appraisal of their flowage easements by June 1. Putney may depose those experts by Aug. 1.
Putney will have until that date to decide whether to challenge TransCanada's appraisal, and if so, the town must submit the original or a revised appraisal by December.
Other towns undergoing or facing similar litigation are responding in their own respective manners.
Westminster has hired its own appraiser, who set the value of TransCanada's flowage easements significantly lower than Sancoucy's valuation.
As a result, TransCanada paid a less “offensive” tax and avoided litigation, Coutant said.
Waterford is on a litigation schedule that puts the town ahead of Putney on the court docket, and the outcome of that case will help inform the town's legal strategy.
Depending on the progress or outcome of the other lawsuits, the Selectboard will then decide how hard Coutant should fight.
During the Selectboard meeting, town officials surmised that that other communities along the river would soon face similar litigation, but Coutant and Town Manager Cynthia Stoddard said they “hadn't heard a peep from Brattleboro” yet.