When the value of a golf course is assessed according to a discretionary easement, can a town separately tax the tees, fairways, sand traps and greens as “improvements” to the land? The New Hampshire Supreme Court held that it cannot.
The Town of Greenland and the Portsmouth Country Club negotiated a discretionary easement deed in 1987 pursuant to former RSA 79-A:15 through 21 (repealed and replaced by < a href=”http://gencourt.state.nh.us/rsa/html/V/79-C/79-C-mrg.htm” target=”_blank”> RSA Chapter 79-C (2003)). The discretionary easement statute allows land that would not ordinarily qualify for current use to be assessed at current use levels, thereby protecting open space. In this case, the agreement called for the assessment of 247 acres, including the golf course playing area, at $400 per acre. The remaining five acres of land containing the parking lot, pro shop, clubhouse and “snack shack” were excluded from the easement and assessed at fair market value.
In addition to the $400 per acre value on the golf course playing area covered by the easement, the town also assessed an additional amount for the value of the golf holes—the tees, fairways, sand traps and greens—as “improvements to the golf course land.” Over the years, this additional assessment totaled $504,000 and was listed on the club’s tax bill under the category of buildings. The club did not object to the assessment for the golf holes until 2001 when a property revaluation was conducted. The club then requested a tax abatement and was denied. The club successfully appealed the issue to the superior court, which ruled the town could not assess the golf holes separately from the underlying open space of the golf course. The town appealed to the New Hampshire Supreme Court.
The town argued that the components of a golf course, such as the tees, fairways, sand traps and greens, are “improvements to the golf course land” and could not be assessed at the current use rate used for open land. The town pointed to the current use statue in effect at the time that instructed towns to assess at current use values “open space land, as classified under the provision of this chapter, excluding any building, appurtenance or other improvement thereon” and concluded that the improvements to the golf course must be assessed separately from the land. The town also noted that the discretionary easement deed entered into with the club agreed to classify the lands encumbered by the easement for purposes of current use assessment as “open space” but said nothing about improvements on the land.
The Court explained that the discretionary easement permits property that does not meet the criteria for open space land under the current use statute to be taxed at a current use rate in exchange for the owner’s obligation not to “subdivide, develop, or otherwise change the use of such land to a more intensive use inconsistent with the purposes of the current use statute” for a period of at least 10 years. In return, the property would be assessed at an amount not to exceed the highest per acre valuation of any category of open space land.
In deciding this case, the Court did not need to rule on whether the tees, fairways, sand traps and greens are “improvements” for purposes of the current use statute with respect to open space land as argued by the town. Instead, the Court interpreted the overall statutory scheme to treat those features as part of the land on which the discretionary easement was granted to the club and precluded their separate taxation as improvements.
The Court pointed to the decision by the legislature directing the Current Use Advisory Board and the Department of Revenue commissioner to adopt by rule a definition of a golf course based on the open space objectives in the current use statute. The definition that was adopted—“a parcel of land, 10 acres or more, used in the playing of the game of golf including greens, fairways, tees, sand traps, and roughs, and such other areas which are located within the established playing area”—led the Court to find that the definition, when taken in the context of the overall statutory scheme, showed an intent on the part of the legislature that discretionary easements for golf courses should include the improvements that make up the playing area. The Court concluded, “Thus, the legislature clearly contemplated that this qualifying land would already be altered from its natural condition.”
The Court denied a request by the club for a retroactive refund of taxes, holding the Club to the statutory deadline of March 1 following the notice of the tax under RSA 76:1-a . The Court agreed with the lower court finding that the town did not “fraudulently conceal its taxing methodology” and that the club could have informed itself about the town’s assessing practices.
The Court also upheld the lower court ruling to deny the club’s request for its attorney’s fees, noting, that since the issue raised in the case had not been previously settled by the Court, it was a “fair and reasonable ground for litigation.”