Segtel is a telecommunications company that owns and operates a fiber optic cable network in Nashua. It does not own any poles or conduits within Nashua, and it does not have its own license from the City authorizing its occupation of the City’s rights of way. Instead, pursuant to pole attachment agreements with utility providers in Nashua, Segtel pays a fee to the utility providers in exchange for the right to place its fiber optic cables on their poles and conduits. These agreements do not require Segtel to pay property taxes. The utility providers’ pole licenses, however, do require the utilities to pay taxes.
When the City learned of Segtel’s use of the utilities’ poles and conduits, the City assessed taxes against Segtel. Segtel’s abatement request was denied, and a lawsuit followed, in which Segtel argued that the City was not entitled to assess taxes against it.
The superior court judge found that the City lacked authority to assess taxes against Segtel for use of the poles and conduits, and the New Hampshire Supreme Court agreed.
The Court recognized that RSA 72:23, I did allow for taxation for the use of a public right of way and that Segtel was using or occupying the right of way. The question, therefore, turned on whether the use or occupation was “under a lease or other agreement the terms of which provide for the payment of properly assessed real and personal property taxes by the party using or occupying said property,” per RSA 72:23, I(a).
The City pointed to the utility pole licenses to satisfy the “lease or other agreement” requirement. However, the Court determined that Segtel was not operating under those pole licenses because Segtel was not a party to those agreements and therefore was not subject to the license terms, including the requirement to pay property taxes. The Court said its determination in this case was consistent with Appeal of Reid, where the Court held that a municipality could not assess tax against lessees of real properties where the leases did not provide for the payment of property taxes. In that case, the Court explained that “the plain language of RSA 72:23, I requires “that the lessees are aware of, and consent to, taxation of their leasehold.”