Wind Colebrook S., LLC v. Town of Colebrook

• Decision Date: 02 August 2022
• Docket Number: SC 20594
• Parties: WIND COLEBROOK SOUTH, LLC v. TOWN OF COLEBROOK
• Court: Connecticut Supreme Court

344 Conn. 150

278 A.3d 442

WIND COLEBROOK SOUTH, LLC

v.TOWN OF COLEBROOK

SC 20594

Supreme Court of Connecticut.

Argued January 19, 2022

Officially released August 2, 2022

Gregory F. Servodidio, Hartford, with whom was Michael J. Marafito, for the appellant (plaintiff).

Patrick E. Power, Winsted, for the appellee (defendant).

Robinson, C. J., and D'Auria, Mullins, Kahn and Ecker, Js.

ROBINSON, C. J.

The principal issue in this appeal is whether wind turbines used for the generation of electricity, and their associated equipment, are properly classified for purposes of taxation as real property pursuant to General Statutes § 12-64 (a)¹ or, instead, as personal property pursuant to General Statutes § 12-41 (c).² The plaintiff, Wind Colebrook South, LLC, appeals³ from the judgment of the trial court rendered primarily in favor of the defendant, the town of Colebrook, in this municipal property tax appeal brought pursuant to General Statutes §§ 12-117a⁴ and 12-119.⁵ On appeal, the plaintiff claims that the trial court improperly upheld the defendant's (1) classification of its two wind turbines and their associated equipment as real property pursuant to § 12-64 (a), (2) overvaluation and overassessment of its property, and (3) double assessment of the plaintiff's declared personal property. Although we conclude that the wind turbines were properly classified as real property, we agree with the plaintiff's claim that their associated equipment should have been classified as personal, rather than real, property. Accordingly, we reverse in part the judgment of the trial court.

The record reflects the following relevant facts, as found by the trial court, and procedural history. The plaintiff owns and operates a wind turbine facility on two parcels of land located at 17 and 29 Flagg Hill Road in Colebrook. The facility, the first and only full-scale wind-to-electricity generation facility in Connecticut, consists of two 2.85 megawatt wind turbines, both located at 29 Flagg Hill Road. The turbines are controlled by a remote computer known as the Supervisory Control and Data Acquisition System (computer system). The computer system and its accompanying equipment and software are all stored at 17 Flagg Hill Road. The turbines, which collectively weigh 418,657 pounds, each consist of a tower, a hub, a nacelle, and a rotor with three blades that have a 338 foot diameter. Each tower is approximately 328 feet in height and contains a control panel and other equipment accessible through an exterior door at its base. According to the defendant, each turbine, including the tower and blade, is a total of 492 feet high measuring from the top of a blade in its full upright position. Secured by 124 large anchor bolts, the turbines are mounted on separate concrete foundations, each of which is 58 feet in diameter and 9 feet deep. Construction of the turbines was completed in October, 2015, and the facility began commercial operation in November, 2015.

Both parties agreed that the turbines have "an approximate useful life of at least twenty years," after which the plaintiff has agreed to decommission them. Decommissioning the turbines is a complex process that will require unfastening the 124 anchor bolts that are cemented into the foundation and removing the turbines. The estimated cost of decommissioning the turbines is between $1,650,000 and $3,200,000. Although the trial court did not make a finding as to the effect on the land of decommissioning the turbines, the defendant argues that it will cause substantial damage to the land.

The defendant first taxed the plaintiff's turbines on its grand list of October 1, 2015. The defendant's assessor, Michele Sloane, determined that the turbines should be taxed as real property and that the costs incurred in the development of the facility should be considered in the valuation of the turbines for purposes of assessment and taxation. Subsequently, the plaintiff filed its 2015 declaration of personal property, which requires tax-payers to differentiate property by line item or code numbers. The plaintiff reported the value of its property under code 16—which includes furniture, fixtures, and equipment—to be $9,628,795, and the value of its property under code 20—which includes electronic data processing equipment—to be $367,000, with no supporting information or documentation to explain the derivation of each value. In light of the amount listed under code 16, Sloane determined that the plaintiff's proposed valuation of that property must have included the turbines, and, as a result, she did not accept the plaintiff's code 16 valuation. She did, however, accept the plaintiff's code 20 valuation. Additionally, because the plaintiff did not explain or substantiate the values reported on its 2015 declaration of personal property, the defendant hired Glenn C. Walker, a certified general real estate appraiser experienced in the appraisal of energy production facilities, to appraise the properties. Sloane relied on Walker's appraisal to conclude that the assessed value for 29 Flagg Hill Road was $9,274,640, with a fair market value of $13,300,100. Sloane continued to use these values on the grand list in 2016, 2017, and 2018.

In its 2017 personal property declaration, the plaintiff listed three new items as code 16 property for 2015 through 2017, again providing no information or explanation about the derivation of those values, according to Sloane. Paul J. Corey, one of the plaintiff's employees, testified that the additional items reported in 2017 were all associated with the turbines. However, Sloane was under the impression that the additional values were not associated with the turbines,⁶ and, for the 2015 through 2017 personal property declarations, she continued to disregard the original amount reported by the plaintiff on its 2015 declaration of personal property. Sloane accepted the additional values as personal property, while also adding a 25 percent penalty for late reporting. Sloane used these valuations again in 2018 for that year's grand list.

The plaintiff challenged Sloane's assessment by appealing to the defendant's board of assessment appeals (board), claiming that Sloane improperly (1) overvalued and overassessed the property, (2) disregarded information regarding the wind turbines reported in the plaintiff's 2015 through 2018 declarations of personal property, (3) classified the wind turbines as real property, and (4) included items that were declared and assessed as personal property in her assessment of the real property, thus subjecting the plaintiff to double assessment and double taxation. The board denied the appeal. Subsequently, the plaintiff appealed from the decision of the board to the trial court pursuant to §§ 12-117a and 12-119.

In its tax appeal, the plaintiff renewed the claims it raised before the board. The plaintiff introduced testimony from an appraiser, P. Barton DeLacy, to challenge the defendant's $13,300,100 fair market valuation of the real property at 29 Flagg Hill Road, which included the turbines. DeLacy prepared a 2015 appraisal report using the cost⁷ and income⁸ approaches and treating the wind turbines and associated equipment as personal property. He ultimately determined that the fair market value of the plaintiff's properties as a whole, both real and personal property at 17 and 29 Flagg Hill Road, was $9,850,500.⁹

The trial court subsequently issued a memorandum of decision, first concluding that the defendant properly classified the wind turbines as real property for purposes of taxation under § 12-64 (a) because they were "structures" or "buildings" within the contemplation of that statute. Although the trial court did not provide an additional analysis regarding the turbines’ associated equipment, it further concluded that the associated equipment was also real property. Given these conclusions, the trial court further determined that the plaintiff failed to establish (1) its allegation of overvaluation and overassessment because the appraisal submitted by DeLacy treated the wind turbines and associated equipment as personal property, (2) that there was a double assessment and double taxation of the plaintiff's declared personal property, and (3) that the assessment of property was manifestly excessive, as Sloane properly used the methods of valuation outlined in General Statutes § 12-62 (b) (2).¹⁰ The trial court did, however, conclude that the plaintiff established that the defendant's imposition of a 25 percent late filing penalty was improper. Accordingly, the trial court rendered judgment in favor of the plaintiff on the illegality of the penalty and in favor of the defendant in all other respects. This appeal followed.

On appeal, the plaintiff claims that the trial court incorrectly concluded that (1) the wind turbines and associated equipment are taxable as real property pursuant to § 12-64 (a), (2) the plaintiff failed to establish that the defendant's assessor overvalued and overassessed the property, and (3) the plaintiff failed to establish that there was a double assessment and, thus, double taxation of its declared personal property. We address each claim in turn.

I

We begin with the plaintiff's claim that the turbines are personal property rather than real property for purposes of taxation. In Connecticut, the taxation of real property is governed by § 12-64, whereas the taxation of personal property is governed by General Statutes § 12-71,¹¹ which provides that personal property must be listed subject to, among other statutes, § 12-41. See footnotes 1 and 2 of this opinion. The plaintiff argues that the turbines are "machines," which are personal property as defined by § 12-41 (c), insofar as they are comprised of the various components expressly identified in that statute, such as cables, wires, and poles. The plaintiff also argues that the turbines do not have any of the defining characteristics of the "structures"...