Following two remands by the Court, the third try proved to be the charm for Verizon as it successfully argued that it had been singled out for real estate tax assessment for its use and occupation of street rights of way in violation of its equal protection rights. The city imposed real estate tax assessment on Verizon pursuant to RSA 72:23, I, but did not assess the gas, cable and electric companies that similarly use and occupy the public ways. RSA 72:23, I provides that real estate and personal property owned by the state, city, town, school district or village district shall be exempt from taxation unless it is used or occupied by other than a governmental entity under a lease or other agreement which provide for the payment of real estate taxes by the party using or occupying the property. The City of Rochester amended Verizon’s pole licenses to include language from RSA 72:23, I to require it to pay real estate taxes for its use of the public ways. It is the imposition of that real estate tax which is the subject of this case.
Selective taxation must be reasonably related to a legitimate state interest and, finding that it was not in this case, the Court upheld the lower court’s ruling striking the tax against Verizon. The City argued that it did not unreasonably single out Verizon because: (1) pole licenses issued to Public Service Company of New Hampshire were also amended to include language specified in RSA 72:23, I; (2) the cable television company had no ‘pole licenses’; and (3) the gas company had no written agreements with the City. Thus, all ‘pole licenses’ issued by the city were amended. The Court disagreed, pointing to the plain language of the statute which states that it applies to “leases and other agreements.” (Emphasis added.) Just because other utilities do not have the same pole licenses as Verizon does not mean that they do not have some “other agreement” with the City to use and occupy public property. The question is not whether all existing pole licenses and agreements have been amended by the City, but instead whether the City, without a rational basis, singled out Verizon by not imposing the tax upon the other utilities for the value of their agreements to use and occupy the public ways.
It also appears that the City determined that since the gas and electric companies already pay taxes on their equipment in the rights of way pursuant to RSA 72:8, and Verizon does not, it was appropriate to impose a tax pursuant to RSA 72:23, I only on Verizon. The Court disagreed, noting that RSA 72:8 does not relate to agreements to use and occupy the public way. Selective taxation must be reasonably related to a legitimate state interest to avoid an equal protection violation. The Court stated: “[h]ere, the City offers, the record reveals, and we can conceive of, no rational reason for selectively imposing this property tax upon Verizon, and not upon other utilities that use and occupy public property in the same manner as Verizon.”