Nash Family Inv. Properties v. Hudson

• Decision Date: 26 November 2001
• Docket Number: No. 2000-024.,2000-024.
• Citation: 786 A.2d 825
• Parties: NASH FAMILY INVESTMENT PROPERTIES v. TOWN OF HUDSON. Ballinger Properties and another v. Town of Londonderry.
• Court: New Hampshire Supreme Court

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786 A.2d 825 NASH FAMILY INVESTMENT PROPERTIES
v.
TOWN OF HUDSON.
Ballinger Properties and another
v.
Town of Londonderry. No. 2000-024. Supreme Court of New Hampshire. November 26, 2001. Rehearing Denied January 9, 2002.

Page 826

Wenger & Cronin, P.C., of Manchester (John F. Bisson and John G. Cronin on the brief, and Mr. Cronin orally), for the plaintiffs.

Grinnell & Bureau, of Londonderry (David R. Connell on the brief), for defendant Town of Londonderry.

Donahue, Tucker & Ciandella, of Exeter (John J. Ratigan orally), for the defendants.

Gallagher, Callahan & Gartrell, P.A., of Concord (Andrew B. Eills on the brief), for the Aggregate Manufacturers Assoc. of New Hampshire, as amicus curiae.

DUGGAN, J.

The plaintiffs, owners of property used for commercial excavation and subject to the provisions of the excavation activity tax under RSA chapter 72-B (Supp.1999), appeal a Superior Court (Hollman, J.) order declaring the excavation activity tax, RSA 72-B:1, III, constitutional. We reverse and remand.

In 1998, pursuant to RSA chapter 72-B, the Towns of Hudson and Londonderry (defendants) assessed taxes against property located within the respective towns and owned by the plaintiffs. Thereafter, the plaintiffs filed declaratory judgment actions in the superior court asserting the excavation activity tax, levied pursuant to RSA 72-B:1, III, violated the State Constitution. By court order and agreement of the parties, the court consolidated the actions, and the cases were argued and submitted upon stipulated facts. After considering the parties' arguments, the trial court concluded the excavation activity tax is constitutional. On appeal, we review the trial court's application of law to the stipulated facts de novo. Tucker v. Merchants Ins. Group, 146 N.H. 168, ___, 769 A.2d 357, 358-59 (2001).

In 1997, the legislature enacted the excavation tax and excavation activity tax, RSA chapter 72-B. See Laws 1997, ch. 219. In 1999, the legislature amended the statute, upon finding "there ha[d] been a great deal of confusion and uncertainty among taxpayers, assessors, and municipalities regarding the applicability of the excavation activity tax imposed by RSA 72-B, and

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how it should be implemented." Laws 1999, ch. 301. In amending the statute, the legislature did not seek to impose any new obligations upon taxpayers; rather, it "wishe[d] to clarify" certain provisions relating to the excavation activity tax. See Laws 1999, 301:1. Thus, the amendment did not change the nature of the tax or its application.

The excavation activity tax generally applies to the pit area opened during an active excavation until that area is reclaimed. See RSA 72-B:1, III, IV. The statute authorizes municipalities to exempt the pit area of property with commercial excavation activity from real estate taxation pursuant to RSA 72:6 (1991), and instead to impose an excavation activity tax. See RSA 72-B:1, III. The excavation activity tax rate is determined by first "assess[ing the excavation] as if it were an equal size parcel devoted to a comparable industrial use located in a comparable location within the taxing jurisdiction," RSA 72-B:12, III, and then applying "the same schedule applicable in the municipality to the billing of real property," RSA 72-B:4, II. The property is assessed on April 1 of the tax year. Id. Certain excavations, including "[a]n excavation that has been reclaimed," RSA 72-B:1, IV(a), or "[a]n excavation that has ceased commercially useful operation prior to August 24, 1977, as set forth in RSA 155-E:2, II(c)," RSA 72-B:1, IV(c), are exempt from the excavation activity tax.

The plaintiffs first contend that the statute violates Part I, Article 12 and Part II, Article 6 of the State Constitution because it creates an improper classification of property for taxation. Under the State Constitution, "[t]he legislature possesses broad authority to classify property as taxable and non-taxable and grant reasonable exemptions from taxation." Opinion of the Justices (Mun. Tax Exemptions for Elec. Util. Personal Prop.), 144 N.H. 374, 383, 746 A.2d 981 (1999). In selecting a certain class of property for taxation and exempting other property, the legislature's exercise of discretion "will be sustained provided just reasons exist for the selection made." Id. "[A] reasonable classification which is sufficiently inclusive to constitute a distinctive class will be upheld, as long as the proposed selection is not arbitrarily made or for the sole purpose of preferring some taxpayers to...