For several years, municipalities and developers have disagreed on how to assess the “Land Use Change Tax” (LUCT) in new subdivisions. The land developer would prefer to have the tax assessed at the time the subdivision is approved and construction begins on required infrastructure, because the market value of the land is lower than it will be after such improvements are installed. The municipality would prefer to have the tax assessed on a “lot by lot” basis as the completed lots are sold, because the market value of the completed lot will be higher.
The NH Supreme Court has reviewed the issue on several occasions, and has appeared to support each result. In Appeal of Estate of Van Lunen, 145 N.H. 82 (2000), the Court supported the “lot-by-lot” assessment methodology. However, in Formula Development Corporation v. Town of Chester, 156 N.H. 177(2007), the concurring opinion suggested that the Van Lunen case had been wrongly decided.
In this matter, the Court affirmed that Van Lunen remains the law in New Hampshire, and refused to overrule its holding. It found that the developer here had not persuasively argued that the earlier case should be overruled, and also found that the most recent legislative amendment to the controlling statute represented strong evidence that the legislature preferred the Van Lunen rule
Accordingly, towns are entitled to impose the LUCT on a “lot-by-lot” basis as disqualifying events occur in the development of a subdivision. Road construction alone does not necessarily remove from the current use program all of the lots that are or could be serviced by the road. If blocks of land large enough to qualify for current use remain in common ownership, they stay in current use until actual construction begins on the lots, or a conveyance occurs which reduces the size of the lot to a point where it no qualifies under the program.
As a final matter, the court noted that the legislature has changed the time available to assess the LUCT. For a change in use occurring after April 1, 2009, a municipality has an 18 month period to assess the LUCT. Previously the law allowed a period of 12 months for such assessment.
The NH Supreme Court has reviewed the issue on several occasions, and has appeared to support each result. In Appeal of Estate of Van Lunen, 145 N.H. 82 (2000), the Court supported the “lot-by-lot” assessment methodology. However, in Formula Development Corporation v. Town of Chester, 156 N.H. 177(2007), the concurring opinion suggested that the Van Lunen case had been wrongly decided.
In this matter, the Court affirmed that Van Lunen remains the law in New Hampshire, and refused to overrule its holding. It found that the developer here had not persuasively argued that the earlier case should be overruled, and also found that the most recent legislative amendment to the controlling statute represented strong evidence that the legislature preferred the Van Lunen rule
Accordingly, towns are entitled to impose the LUCT on a “lot-by-lot” basis as disqualifying events occur in the development of a subdivision. Road construction alone does not necessarily remove from the current use program all of the lots that are or could be serviced by the road. If blocks of land large enough to qualify for current use remain in common ownership, they stay in current use until actual construction begins on the lots, or a conveyance occurs which reduces the size of the lot to a point where it no qualifies under the program.
As a final matter, the court noted that the legislature has changed the time available to assess the LUCT. For a change in use occurring after April 1, 2009, a municipality has an 18 month period to assess the LUCT. Previously the law allowed a period of 12 months for such assessment.