Colonial Plaza Realty Trust (the Trust) owns two adjacent parcels, Lots 6 and 8. In 2004, the Trust, as landlord, entered a ground lease for Lot 6 with Walgreen, as tenant, for 75 years to build and maintain a store and other improvements, with options for Walgreen to terminate at certain intervals after 25 years. The lease makes Walgreen responsible for all property tax bills and provides further: "Landlord shall have all real estate tax bills for the Premises forwarded by the applicable taxing authorities directly to Tenant and, at Tenant's request, if possible, the real estate tax bills shall be in the name of Tenant or Subtenant…." Walgreen asked for and received the tax bills for Lot 6.
The Trust filed a tax abatement appeal with the Board of Tax and Land Appeals (BTLA) for 2006 and 2007 for Lot 8. Walgreen separately filed for an abatement for Lot 6. The Trust's appeal raised the issue of the applicability of the rule of Appeal of Sunapee, 126 N.H. 214, 217 (1985), in which the taxpayers owned two adjacent lots. In Sunapee, the Court held:
When a taxpayer challenges an assessment on a given parcel of land, the [BTLA] must consider assessments on any other of the taxpayer's properties, for a taxpayer is not entitled to an abatement on any given parcel unless the aggregate valuation placed on all of his property is unfavorably disproportionate to the assessment of property generally in the town.… Justice does not require the correction of errors of valuation whose joint effect is not injurious to the appellant.… When a taxpayer owns two parcels, then, a request for abatement on the first will always require consideration of the assessment on the second.
The Trust argued that the Sunapee rule should not apply to its abatement appeal for Lot 8. The Trust argued that it should not have to be concerned with the value of Lot 6 because Walgreen, as tenant, consented to be taxed on Lot 6 and has exclusive possession and use for up to 75 years. The City argued that, since the Trust still owned Lot 6, subject to the lease, the value of Lot 6 must be considered to determine the Trust's proportional share of property taxes in the municipality. The BTLA observed that the case involved "an admittedly close question of law on which reasonable minds may disagree."
On one hand, it is fundamental that real property taxes are assessed on the fee and not on the leasehold property interest. Hampton Beach Casino, Inc. v. Hampton, 140 N.H. 785, 788 (1996). RSA 76:10, I provides in part that "[t]he selectmen shall assess [property] taxes to the owner as of April 1, or to the current owner, if known." Even when a tax bill is sent to a tenant, if a tenant fails to pay the taxes, a tax deed will ultimately be issued for the owner's entire interest in the property.
On the other hand, RSA 73:10 provides: "Real and personal property shall be taxed to the person claiming the same, or to the person who is in the possession and actual occupancy thereof, if such person will consent to be taxed for the same; … Moreover, it is well-established that tenants or other non-owners with a financial interest can be 'aggrieved' and have standing to seek an abatement." Appeal of Thermo-Fisher Scientific, Inc. (New Hampshire Board of Tax and Land Appeals), 160 N.H. 670 (2010).
The BTLA ruled that the Sunapee rule did not apply. On appeal, the Supreme Court upheld the BTLA decision, noting that the Sunapee rule addresses the proportional tax burden of the individual "taxpayer," not necessarily the owner. The Court clarified and limited the Sunapee rule: "[W]hen a taxpayer owns more than one parcel in any given municipality, a request for abatement on one will always require consideration of the assessment on any other parcels for which the owner is also the taxpayer." [emphasis added]
The legislature may wish to clarify the interplay between RSA 73:10 and RSA 76:10.