Verizon New England, Inc. v. Commissioner of Revenue and Assessors of Belmont, Cambridge, Springfield and Worcester and Assessors of Belmont, Cambridge, Springfield and Worcester v. Commissioner of Revenue and Verizon New England (January 23, 2017)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD


VERIZON NEW ENGLAND INC. 	v. 		COMMISSIONER OF REVENUE
and BOARDS OF ASSESSORS OF BELMONT, CAMBRIDGE,
SPRINGFIELD AND WORCESTER

BOARDS OF ASSESSORS OF 	v.		COMMISSIONER OF REVENUE
BELMONT, CAMBRIDGE, 			and VERIZON NEW ENGLAND
SPRINGFIELD AND WORCESTER			INC.	

Docket Nos. C273019 et al			Promulgated: 
								January 23, 2017


	These are consolidated appeals under the formal procedure pursuant to G.L. c. 58A, §§ 6 and 7 and G.L. c. 59, § 39, challenging the central valuations for fiscal years 2005 through 2009 ("fiscal years at issue"), determined and certified by the Commissioner of Revenue ("Commissioner") under G.L. c. 59, § 39, for the "machinery, poles, wires and underground conduits, wires and pipes" ("§ 39 property") of Verizon New England Inc. ("Verizon"), located in the communities of Belmont, Cambridge, Springfield and Worcester ("municipalities").  
Commissioner Scharaffa heard these appeals and was joined in each of the decisions by Chairman Hammond and Commissioners Rose and Good.  Commissioner Chmielinski took no part in the deliberations or decisions of these appeals.  The decisions were as follows.  
With regard to the appeals filed by Verizon against the Commissioner and the municipalities for fiscal years 2005 through 2008, the decisions were for the Commissioner and the municipalities.  
With regard to the appeals filed by Verizon against the Commissioner and the municipalities for fiscal year 2009, the decisions were for Verizon.  
With regard to the appeals filed by the municipalities against the Commissioner and Verizon, the decisions were for the Commissioner and Verizon.
These findings of fact and report are made pursuant to requests by Verizon, the Commissioner and the municipalities under G.L. c. 58A, § 13 and 831 CMR 1.32. 

William A. Hazel, Esq., James F. Ring, Esq., and Diana C. Cuff, Esq. for Verizon.

Daniel A. Shapiro, Esq. and Michael P. Clifford, Esq. for the Commissioner.

	Anthony M. Ambriano, Esq. for the municipalities.

FINDINGS OF FACT AND REPORT
Introduction
At all relevant times, Verizon qualified as a telephone company within the meaning of G.L. c. 59, § 39 ("§ 39") and was thus subject to central valuation of its non-exempt property.  As a telephone company, Verizon's property is exempt from property taxes except for its "poles, underground conduits, wires, pipes and machinery used in manufacture or in supplying or distributing water."  G.L. c. 59, § 5(16), First.  
Prior History
Verizon and certain boards of assessors of various Massachusetts cities and towns each appealed to the Appellate Tax Board ("Board"), under § 39, from central valuations of § 39 property certified by the Commissioner for fiscal years 2003 through 2009.  See In re Verizon New England Inc. Consolidated Central Valuation Appeals:  Boston and Newton, Mass. ATB Findings of Fact and Reports 2009-851 ("Verizon I").  There were 970 individual appeals originally associated with Verizon I and the Board issued orders consolidating and bifurcating for trial all 970 appeals.  By Order dated March 3, 2008, which decided the issues in the first phase of the hearing, the Board held that poles and wires erected upon public property and construction work in progress ("CWIP") were taxable G.L. c. 59, § 18, First.  Then by Order dated April 1, 2008, the Board designated appeals involving only Newton and Boston as the cases to go forward for hearing as to valuation and any remaining issues.  All other appeals were held in abeyance pending the Board's decisions in the Newton and Boston cases and any further appeals of those decisions.  
The assessors of Boston and Newton had previously litigated a § 39 appeal concerning the valuation of § 39 property owned by another telecommunications company, In Re: MCI Consolidated Central Valuation Appeals: Boston and Newton, Mass. ATB Findings of Fact and Reports 2008-255 ("MCI"), aff'd in part and rev'd in part, sub nom In the Matter of the Valuation of MCI Worldcom Network Services, Inc., 454 Mass. 635 (2009).  Pending the resolution of the MCI consolidated appeals, which all parties to the Verizon I appeals treated as the seminal case for valuation of § 39 property, all other § 39 central valuation appeals involving other telephone companies and municipalities were held in abeyance.  See MCI, Mass. ATB Findings of Fact and Reports at 2008-257.  
After the Board decided MCI and the Appeals Court completed its review of that case, the Board decided Verizon I, the appeals involving property located in Boston and Newton.  Among other rulings, the Board in Verizon I reaffirmed its ruling in MCI that the Commissioner's trended reproduction cost new less depreciation methodology was an appropriate approach for valuing § 39 property of a telecommunications taxpayer for fiscal years 2005 through 2009.  Verizon I at 2009-976.  The Board's decision in Verizon I with respect to the valuation of § 39 property pertained to Verizon's property located only in the cities of Boston and Newton.  The Board in Verizon I also reaffirmed its ruling in MCI that CWIP was subject to taxation as § 39 property.  Verizon I at 2009-967.  The Verizon I Board also ruled that poles and wires over public property were subject to taxation pursuant to G.L. c. 59, § 18, First.  Id. at 2009-946.  Because the Board originally made this ruling by its Order dated March 3, 2008, the ruling applied to Verizon's property located in all of the municipalities involved in these appeals.   
Verizon appealed the Board's decision in Verizon I to the Appeals Court on the issues of the taxability of poles and wires over public property and CWIP.  In Verizon New England Inc. v. Board of Assessors of Boston et al., 81 Mass. App. Ct. 444 (2012) ("Verizon II"), the Appeals Court ruled that "to the extent that CWIP consists of '[u]nderground conduits, wires and pipes laid in public ways, . . . and poles, underground conduits and pipes, together with the wires thereon or therein, laid in or erected upon private property,' it is taxable for the years in question" pursuant to G.L. c. 59, § 18, Fifth.  Verizon II, 81 Mass. App. Ct. at 455.  However, the Appeals Court reversed the Board's ruling that poles and wires located on public ways ("aerial plant over public ways") were taxable and remanded the case to the Board.  Id. at 454-55, 456.  
The Instant Appeals
The appeals involving the valuation of § 39 property located in jurisdictions other than Boston and Newton were held in abeyance at the Board pending the appeal of Verizon I.  After the Appeals Court decision in Verizon II, Verizon and all of the cities and towns, with the exception of the four municipalities that are parties to the present appeals, settled their pending appeals. 
The issue in these appeals is whether, with the deduction of aerial plant over public ways, the Commissioner's certified valuation of Verizon's § 39 property substantially exceeded its fair market value, as argued by Verizon, or substantially understated its fair market value, as argued by the municipalities, for any of the fiscal years at issue.  
For each of the fiscal years at issue, Verizon timely filed with the Commissioner, pursuant to G.L. c. 59, § 41, a Form 5941 and reported its § 39 property in accordance with the Commissioner's instructions.  The Commissioner certified Verizon's § 39 property for each of the fiscal years at issue.  The parties stipulated that the municipalities have assessed personal property tax against Verizon based on the Commissioner's values and that Verizon has paid all personal property tax so assessed.  The Commissioner certified the following total values for each community for each fiscal year:
	Belmont	Cambridge	Springfield	Worcester	
FY 2005	$ 4,742,700	$31,630,700	$32,539,800	$35,003,100	
FY 2006	$ 4,485,100	$30,052,600	$30,983,900	$34,674,800	
FY 2007	$ 5,623,400	$30,644,100	$30,960,200	$34,506,300	
FY 2008	$ 5,823,100	$34,657,700	$45,003,200	$39,009,000	
FY 2009	$13,773,900	$43,036,600	$45,741,100	$53,988,900	

The above certified values do not include CWIP or aerial plant over public ways for fiscal years 2005 through 2008.  Following the Board's rulings in Verizon I, the Commissioner required all telephone companies to supplement their fiscal year 2009 Form 5941 filings by reporting all aerial plant over public ways and CWIP.  Verizon complied with those instructions and filed supplemental property listings for fiscal year 2009.  Therefore, the certified values for fiscal year 2009, as depicted in the above chart, include CWIP and aerial plant over public ways.  Verizon maintained that, based on its supplemental Form 5941, the total value of its aerial plant over public ways located in each municipality for fiscal year 2009 was as follows:



Municipality	Verizon's claimed FY 2009 value reduction for aerial plant over public ways     as valued  by Commissioner	
Belmont	$ 7,612,562	
Cambridge	$ 7,655,986	
Springfield	$ 8,051,261	
Worcester	$13,747,311	

Included within Verizon's category of "aerial plant over public ways" was intra-building cable, which were laid between or within buildings.  The Appeals Court ruled that aerial plant over public ways was not taxable.  See Verizon II at 449.  However, the taxability of intra-building cable located on private property was not before the Board in Verizon I or the Appeals Court in Verizon II.  In accordance with the Statement of Agreed Facts submitted by the parties in the present appeals, the Board found that the value of Verizon's aerial plant over public ways for fiscal year 2009 was as follows:
Municipality	Verizon's FY 2009 intra-building cable included within aerial plant over public ways as reported  	Values of aerial plant over public ways less intra-building cable as found by the Board	
Belmont	$  139,815	$ 7,472,747	
Cambridge	$2,544,073	$ 5,111,913	
Springfield	$   53,567	$ 7,997,586	
Worcester	$  908,231	$12,839,080	

Evidence before the Board
At the hearing, Verizon presented its case-in-chief through the testimony of four witnesses: Jerome C. Weinert, whom the Board qualified as an expert in the area of telecommunications property valuation; Gary Williams, Verizon's Manager of Property Tax; Jorge Medina, Verizon's Supervisor in Network Engineering & Operations; and Ellen Joy, Verizon's Right of Way Agent.  Mr. Weinert had previously testified before the Board on the issue of the methodology for valuing § 39 property in MCI and in Verizon I.  
The Commissioner presented two witnesses: Brenda Cameron, Deputy Chief of the Bureau of Local Assessment ("BLA"); and George E. Sansoucy, whom the Board qualified as an expert in the area of valuing utility and telephone company property and as an expert in the area of engineering.  Like Mr. Weinert, Mr. Sansoucy had also previously testified before the Board on the issue of the methodology for valuing § 39 property in MCI and in Verizon I.  
The municipalities presented two witnesses: William M. Ford, the assessor of Worcester; and Stephen Barreca, of BCRI Valuation Services, whom the Board qualified as an expert in the area of telecommunications property valuation.  
The parties also submitted documentary evidence in support of their positions.  
At the hearing, Mr. Medina testified regarding Verizon's installation and use of new § 39 property.  Mr. Medina testified that, as utility poles were erected, Verizon's engineers and right-of-way agents made determinations as to whether the poles are being placed on public or private property for purposes of obtaining necessary permits (from the municipality) or easements (from private property owners).  This information was also entered into the Verizon's accounting system.  The Board found Mr. Medina's testimony on Verizon's ability to distinguish whether its poles are placed on public or private property to be credible.  
Mr. Medina also testified about how Verizon, as the Incumbent Local Exchange Carrier ("ILEC"), is required to maintain its existing metallic cable property system.  His testimony also indicated, however, that the aging system not only continued to stay in service but also served to support new property, including Fiber Optic ("FiOS") and Digital Subscriber Line ("DSL") products.  
The Board has thoroughly described the valuation methodology developed and implemented by the BLA in MCI and Verizon I.  Neither expert witness offered any information that varied in any material way from the information they had offered in previous appeals before the Board.  Therefore, the Board herein summarizes the testimonies of Mr. Sancoucy and Mr. Weinert given in the present appeals as they pertained to the valuation methodology utilized by the Commissioner in her central valuation of § 39 property, as developed by Mr. Sansoucy, and the alternative valuation methodology developed by Mr. Weinert and proposed by Verizon.  
In 2002, Mr. Sansoucy was selected by the BLA to evaluate the Commissioner's then-existing valuation process for valuing telephone companies' § 39 property and to design an automated mass appraisal methodology, capable of being updated annually, to determine values for that property.  Mr. Sansoucy developed a "trended reproduction cost new less depreciation" methodology that began with the original cost of assets as reported by the taxpayer on Form 5941, including all property owned on the valuation date, not just property in service.  See MCI at 2008-288; Verizon I at 2009-887.  Mr. Sansoucy's methodology trended the original cost to a current "reproduction cost new" value, which was then depreciated based on asset lives approved by the Federal Communications Commission ("FCC") to determine a "reproduction cost new less depreciation" value.  See MCI at 2008-288-89 and Verizon I at 2009-887.  Finally, for fiscal years 2005 through 2009, the Commissioner's methodology applied an additional 25% economic obsolescence deduction to most asset categories.  See MCI at 2008-293 and Verizon I at 2009-892.
For fiscal year 2009, following the Board's March 3, 2008 Order in Verizon I ruling that Verizon was taxable on its poles and wires over public as well as private ways and on its CWIP, the BLA issued several memoranda notifying telephone and telegraph company filers, including Verizon, that they had to supplement their fiscal year 2009 filings to include that property.  Verizon supplemented its fiscal year 2009 filing to include aerial plant over public ways and its CWIP. 
At the hearing of these appeals, Verizon presented its expert witness, Mr. Weinert, who offered an appraisal report and testified extensively with respect to that report.  Mr. Weinert's appraisal used a cost of replacement less depreciation methodology ("CORLD") to value Verizon's § 39 property situated in Belmont, Cambridge, Springfield and Worcester as of the respective valuation dates for the fiscal years at issue.  
Like the Commissioner's methodology, Mr. Weinert's CORLD methodology began with the original cost of assets as reported to the Commissioner on Forms 5941 and trended the original cost to a current "reproduction cost new" value.  However, Mr. Weinert's CORLD methodology differed from the Commissioner's in several key respects.  
First, Mr. Weinert included "roll-up" reporting of "vintage year" (pre-1981) property except generators.  Verizon I at 2009-911.  Second, Mr. Weinert called for significant utilization deductions for metallic copper cable and associated conduit.  MCI at 2008-297-98 and Verizon I at 2009-875.  Mr. Weinert then calculated normal and functional depreciation deductions based on "service life drivers," in contrast with the Commissioner's straight-line depreciation deductions   MCI at 2008-299 and Verizon I at 2009-879.  Mr. Weinert next allowed for a net salvage deduction to Verizon's § 39 property.  MCI at 2008-299 and Verizon I at 2009-881.  Finally, Mr. Weinert's CORLD methodology included significant economic obsolescence deductions.  See MCI at 2008-300 and Verizon I at 2009-881-82. 
In the instant appeals, the Commissioner's expert witness, Mr. Sansoucy, criticized Mr. Weinert's CORLD methodology in the same manner as was reported in Verizon I, pointing out the following as significant flaws in Mr. Weinert's methodology:  the roll-up reporting of "vintage year" (pre-1981) property except generators, which significantly understated the value of vintage year property in reporting costs (Verizon I at 2009-912); the use of property service lives that were significantly lower than the FCC service lives used by the Commissioner (Verizon I at 2009-935); and Mr. Weinert's use of various deductions, including the utilization deduction for metallic copper lines (Verizon I at 2009-917), net salvage deduction (Verizon I at 2009-918), and economic obsolescence deductions that Mr. Sancoucy found to be inappropriate for property that added value to Verizon's network because it was still in use and/or provided structural support (Verizon I at 2009-918-20).  These significant differences between Mr. Weinert's and the Commissioner's methodologies resulted in an overall lower value of the subject § 39 property than the Commissioner's certified values for the fiscal years at issue, as indicated in the table below:
Tax year	Verizon's § 39 property values as certified by Commissioner	Verizon's § 39 property values as calculated by Mr. Weinert's CORLD methodology	Differences	
2005	Belmont:     $ 4,742,700
Cambridge:   $31,630,700
Springfield: $32,539,800
Worcester:   $35,003,100	Belmont:     $ 3,374,090
Cambridge:   $23,139,761
Springfield: $23,184,816
Worcester:   $25,406,190	Belmont:     $ 1,368,610
Cambridge:   $ 8,490,939
Springfield: $ 9,354,984
Worcester:   $ 9,596,910	
2006	Belmont:     $ 4,485,100
Cambridge:   $30,052,600
Springfield: $30,983,900
Worcester:   $34,674,800	Belmont:     $ 2,578,438
Cambridge:   $17,809,085
Springfield: $18,090,463
Worcester:   $20,673,724	Belmont:     $ 1,906,662
Cambridge:   $12,243,515
Springfield: $12,893,437
Worcester:   $14,001,076	
2007	Belmont:     $ 5,623,400
Cambridge:   $30,644,100
Springfield: $30,960,200
Worcester:   $34,506,300	Belmont:     $ 3,310,734
Cambridge:   $17,153,674
Springfield: $18,172,611
Worcester:   $20,527,006	Belmont:     $ 2,312,666
Cambridge:   $13,490,426
Springfield: $12,787,589
Worcester:   $13,979,294	
2008	Belmont:     $ 5,823,100
Cambridge:   $34,657,700
Springfield: $35,003,200
Worcester:   $39,009,000	Belmont:     $ 2,987,507
Cambridge:   $15,734,759
Springfield: $16,529,199
Worcester:   $18,617,461	Belmont:     $ 2,835,593
Cambridge:   $18,922,941
Springfield: $18,474,001
Worcester:   $20,391,539	
2009	Belmont:     $13,773,900
Cambridge:   $43,036,600
Springfield: $45,741,100
Worcester:   $53,988,900	Belmont:     $ 2,684,151
Cambridge:   $13,298,046
Springfield: $14,875,411
Worcester:   $16,387,938	Belmont:     $11,089,749
Cambridge:   $29,738,554
Springfield: $30,865,689
Worcester:   $37,600,962	

The values for fiscal years 2005 through 2008 do not include CWIP or aerial plant over public ways but the values for fiscal year 2009 do include CWIP and aerial plant over public ways.
The municipalities also critiqued Mr. Weinert's valuation of Verizon's § 39 property.  The municipalities presented their case-in-chief through the testimony and report of Mr. Barreca.  Using Cambridge as a representative city, Mr. Barreca evaluated the impact on the centralized valuations of several elements of Mr. Weinert's CORLD methodology, particularly Mr. Weinert's roll-up reporting of Verizon's vintage property, and his excessive economic obsolescence deductions.  Mr. Barreca criticized the same key points of the CORLD methodology that the Board had previously rejected in Verizon I.  These flaws included: Mr. Weinert's random selection of higher-than-actual income tax rates that resulted in higher deductions from Verizon's revenue (Verizon I at 2009-926); the deduction of property tax as an expense rather than accounting for it as part of the discount rate (Verizon I at 2009-927); Mr. Weinert's excessive economic obsolescence deductions (Verizon I at 2009-929); and his application of economic obsolescence deductions to CWIP (Verizon I at 2009-910).  
Unlike Verizon I, the municipalities further contended in the instant appeals that Verizon's intra-building cable was taxable during the fiscal years at issue.  Relying on G.L. c. 59, § 18, Fifth, the municipalities argued that intra-building cable were taxable to Verizon as "underground conduits and pipes, together with the wires thereon or therein, laid in or erected upon private property."  Accordingly, the municipalities argued that the portion of Verizon's reported aerial plant that included intra-building cable was properly taxable.  
On the basis of all the evidence, the Board, as it did in Verizon I, found and ruled in the instant appeals that Mr. Weinert's CORLD methodology was "premised on several highly subjective and speculative assumptions as well as various conceptual errors" and therefore, that this methodology was not a valid approach for valuing § 39 property.  Verizon I at 2009-924.  Further, as in Verizon I, the Board found and ruled that Mr. Sansoucy's methodology as adopted by the Commissioner was a reasonable approach to valuing Verizon's § 39 property: 
As the Board found in MCI at 2008-311-12, the Board also finds here that the Commissioner's trended reproduction cost new less depreciation methodology for centrally valuing telephone companies' § 39 property was a proper approach and furthered the important Legislative purpose behind § 39 of providing a standardized state-wide valuation system for telephone companies that promotes uniformity, equality, objectivity and fairness in valuing telephone companies' § 39 property in all of the various municipalities in which such property is located.

Verizon I at 2009-930. 
Therefore, as it did in Verizon I, the Board found and ruled that Verizon failed to meet its burden of proving a methodology for valuing its § 39 property that would result in values substantially lower than those determined by the Commissioner for fiscal years 2005 through 2008.
For fiscal year 2009, in accordance with the Appeals Court ruling in Verizon II, the Board found and ruled that Verizon's aerial plant over public ways was not subject to tax and, therefore, the total certified value of its § 39 property must accordingly be reduced.  However, the Board found and ruled that intra-building cables were subject to tax because they were located between or within private buildings and were, therefore, "wires . . . laid in or erected upon private property."  § 39.  Because Verizon's values for aerial plant over public ways included the value of taxable intra-building cables, the Board's reduction of the certified value is limited to the value of Verizon's aerial plant over public ways less the value of its intra-building cable.   
For fiscal years 2005 through 2008, although the Board agreed with the municipalities that Verizon's intra-building cable was taxable, no parties submitted evidence of the value of the intra-building cable that had escaped taxation.  The Board thus found and ruled that the municipalities failed to meet their burden of proving values for Verizon's § 39 property that were substantially higher than those certified by the Commissioner for fiscal years 2005 through 2008.  
Verizon's aerial plant was included in the Commissioner's certified value of Verizon's § 39 property for fiscal year 2009.  On the basis of the parties' Statement of Agreed Facts, the Board finds that the certified value of Verizon's aerial plant included the value of intra-building cable.  In the absence of any credible evidence that the certified value of Verizon's § 39 property should otherwise be changed, the Board found and ruled that the Commissioner's certified value of Verizon's § 39 property for fiscal year 2009 should be reduced by the value of its aerial plant over public ways, but not by the value of its intra-building cable.
Accordingly, the Board issued decisions in the instant appeals as follows.  The Board issued decisions for the appellees, Commissioner and municipalities, for the fiscal years 2005 through 2008 appeals.  The Board issued decisions for the appellant, Verizon, for the fiscal year 2009 appeals reducing the value of its § 39 property and ordering an abatement of taxes in accordance with the following schedule:
Municipality
	Docket No.	Total certified value of Verizon's § 39 property 	Reduction for aerial property over public ways (not including intra-building property)	Board's value of Verizon's   § 39 property	
Belmont	C295597	$13,773,900	$ 7,472,747	$ 6,301,153	
Cambridge	C295620	$43,036,600	$ 5,111,913	$37,924,687	
Springfield	C295851	$45,741,100	$ 7,997,586	$37,743,514	
Worcester	C295918	$53,988,900	$12,839,080	$41,149,820	
 
Municipality	Docket No.	Overvaluation	
Belmont	C295597	$ 7,472,747	
Cambridge	C295620	$ 5,111,913	
Springfield	C295851	$ 7,997,586	
Worcester	C295918	$12,839,080	


OPINION
Statutory Background
Non-exempt tangible personal property of a telephone company is subject to local taxation in the municipalities where the property is located.  G.L. c. 59, §§ 2 and 18.  To ensure consistency and uniformity in the property's valuation across multiple municipalities, the Legislature in 1915 enacted G.L. c. 59, §§ 39-42, which provides for a system of central valuation, whereby the Commissioner determines the value of a telephone company's taxable "machinery, poles, wires and underground conduits, wires and pipes" on a municipality-by-municipality basis and certifies those values to the company and the appropriate boards of assessors.  G.L. c. 59, § 39; see also MCI at 343-44 (citing Commissioner of Corporations and Taxation v. Assessors of Springfield, 330 Mass. 433, 436 (1953)).  
In Verizon I, the Board found and ruled that, for tax years 2003 through 2009, Verizon was taxable on all of its poles and the wires thereon erected upon public ways as well as upon private property under G.L. c. 59, § 2 and G.L. c. 59, § 18, First.  Verizon I at 942.  The Board also found and ruled that Verizon's CWIP was taxable § 39 property and thus subject to central valuation by the Commissioner.  Id. at 943.  Finally, the Board found and ruled that the Commissioner's methodology for valuing § 39 property, as developed by Mr. Sansoucy, was a proper approach.  Id. at 977.
On June 29, 2009, the Legislature amended G.L. c. 59, § 18, Fifth to explicitly provide for the taxation of poles and the wires thereon erected upon public ways and private property by adding the following:
Poles, underground conduits, wires and pipes of telecommunications companies laid in or erected upon public or private ways and property shall be assessed to their owners in the cities or towns where they are laid or erected.  For purposes of this clause, telecommunications companies shall include cable television, internet service, telephone service, data service and any other telecommunications service providers.
   
This amendment was effective for fiscal years beginning on or after July 1, 2009 (fiscal year 2010 and thereafter).
In Verizon II, the Appeals Court reversed the Board's ruling that aerial plant over public ways was taxable for tax years 2003 through 2009.  Id. at 454-55, 456.  The Appeals Court also ruled that "to the extent that CWIP consists of '[u]nderground conduits, wires and pipes laid in public ways, . . . and poles, underground conduits and pipes, together with the wires thereon or therein, laid in or erected upon private property,' it is taxable for the years in question" pursuant to G.L. c. 59, § 18, Fifth.  Verizon II, 81 Mass. App. Ct. at 455.  

The Commissioner's Certified Values 
Under the system of central valuation, the Commissioner determines the value of the taxable "machinery, poles, wires and underground conduits, wires and pipes of all telephone . . . companies" on a municipality-by-municipality basis and certifies those values to the telephone companies and the appropriate boards of assessors of the cities and towns in which the taxable § 39 property is located.
The question of whether the Commissioner's methodology is valid for valuing § 39 property is one that has been thoroughly litigated before the Board and the courts.  See, e.g., MCI, Mass. ATB Findings of Fact and Reports 2008-255, aff'd, In the Matter of the Valuation of MCI Worldcom Network Services, Inc., 454 Mass. 635 (2009); Verizon I, Mass. ATB Findings of Fact and Reports 2009-851, aff'd in part, rev'd in part, Verizon II, 81 Mass. App. Ct. 444 (2012).  The valuation issue in the instant appeals has not been resolved by the Verizon I appeal, because the valuation ruling in Verizon I pertained only to property in Boston and Newton.  Every other municipality that was originally a party to the appeals associated with Verizon I after the issuance of Verizon II, except the assessors of Belmont, Cambridge, Springfield and Worcester, who wanted an opportunity to prove that, for fiscal year 2009, the correct abatement amount owed to Verizon was not necessarily equal to the difference in tax between the Commissioner's certified value of Verizon's § 39 property minus the value of Verizon's aerial plant over public ways. 
In these appeals, the Board was called upon to decide whether Verizon or the municipalities successfully supported a change to the Commissioner's certified values for Verizon's § 39 property, either because the certified values were too high (as advocated by Verizon) or because they were too low (as advocated by the municipalities).  
The assessors are required to assess personal property at its fair cash value. G.L. c. 59, § 38.  "This mandate is true even if the property is centrally valued by the Commissioner under G.L. c. 59, § 39."  Verizon I at 2009-971 (citing Assessors of Haverhill v. New England Tel. & Tel. Co., 332 Mass. 357, 359 (1955))("The value to be determined by the commissioner under § 39 is the fair cash value of the property.").  An appellant, whether a municipality or a telephone company, challenging the Commissioner's central valuation of telecommunications property has the burden of proof under § 39.  MCI at 2008-374-75 (citing Foxboro Associates v. Assessors of Foxborough, 385 Mass. 679, 691 (1982) and Reliable Electronic Finishing Co., Inc. v. Assessors of Canton, 410 Mass. 381, 382 (1991)).  As has been established in previous telecommunications appeals, including Verizon I, the Commissioner's central valuation of § 39 property will withstand challenge by the taxpayer or by the municipality unless the appellant can establish that the valuation is "substantially higher" (the assessors' challenge) or "substantially lower" (the taxpayer's challenge).  G.L. c. 59, § 39; see also Verizon I at 906.
In the MCI and Verizon I appeals, the Board found that the Commissioner's methodology for centrally valuing telephone companies' § 39 property, as developed by Mr. Sansoucy, was a proper approach.  By contrast, the Board in MCI and Verizon I found serious flaws in Mr. Weinert's CORLD methodology, including but not limited to: roll-up reporting of vintage year property; use of property service lives that were significantly lower than FCC service lives used in straight-line depreciation; and the use of multiple deductions and excessive economic obsolescence deductions to depreciate the value of § 39 property.  MCI at 2008-323-29 and Verizon I at 2009-929.  Verizon offered nothing new in the present appeals to persuade the Board that it should depart from its previous ruling that Mr. Weinert's approach was fraught with speculation and error, which rendered "the values that Mr. Weinert derived from his CORLD methodology unreliable and, therefore, neither credible nor probative."  Verizon I at 2009-977.
Because the Board rejected Mr. Weinert's approach and upheld the Commissioner's methodology, the only issue left was to determine the value of any reduction to the certified value for fiscal year 2009 resulting from the inclusion of the value of aerial plant over public ways.  While the municipalities correctly pointed out that intra-building cable should be included in Verizon's § 39 property, no parties submitted evidence of these values for fiscal years 2005 through 2008.  In the absence of credible evidence indicating a value of Verizon's § 39 property that was significantly higher than the value certified by the Commissioner, the Board rules that the municipalities failed to meet their burdens of proof on this issue for fiscal years 2005 through 2008.  See Staples v. Commissioner of Corps. and Tax'n, 305 Mass. 20, 26 (1940).
For fiscal year 2009, Verizon included CWIP and aerial plant over public ways in its Form 5941.  In accordance with Verizon II, the Board rules that the Commissioner's certified values for Verizon's § 39 property should not have included values of aerial plant or CWIP over public ways.  Neither party offered evidence of the value of CWIP located on or over public ways so no adjustment to Verizon's certified value for fiscal year 2009 is appropriate on this issue.  However, on the basis of the parties' Statement of Agreed Facts, the certified value of Verizon's aerial plant included the value of intra-building cable.  The Board found and ruled that the Commissioner's certified value of Verizon's § 39 property for fiscal year 2009 should be reduced by the value of its aerial plant over public ways, minus the value of its intra-building cable.  
Accordingly, for fiscal year 2009, the Board issued decisions for Verizon reducing the Commissioner's certified values of Verizon's § 39 property as follows:
Municipality
	Docket No.	Total certified value of § 39 property as reported by Verizon on its Forms 5941	Reduction for aerial property over public ways (not including intra-building property)	Board's value of Verizon's   § 39 property	
Belmont	C295597	$13,773,900	$ 7,472,747	$ 6,301,153	
Cambridge	C295620	$43,036,600	$ 5,111,913	$37,924,687	
Springfield	C295851	$45,741,100	$ 7,997,586	$37,743,514	
Worcester	C295918	$53,988,900	$12,839,080	$41,149,820	

Municipality	Docket No.	Overvaluation	
Belmont	C295597	$ 7,472,747	
Cambridge	C295620	$ 5,111,913	
Springfield	C295851	$ 7,997,586	
Worcester	C295918	$12,839,080	

The Board issued decisions for the appellees for the remaining appeals.

						 THE APPELLATE TAX BOARD
		    


    By: _____________________________________       
      Thomas W. Hammond, Jr., Chairman 
A true copy,

Attest: __________________________
	      Clerk of the Board

APPENDIX A


Docket
No.	Fiscal
Year	
Appellant	
Appellees	
				
C273569	2005	Verizon	Belmont Assessors/Commissioner	
C273571	2005	Verizon	Cambridge Assessors/Commissioner	
C273615	2005	Verizon	Springfield Assessors/Commissioner	
C273625	2005	Verizon	Worcester Assessors/Commissioner	

C273019	
2005	
Worcester Assessors	
Commissioner/Verizon	
				
C279461	2006	Verizon	Belmont Assessors/Commissioner	
C279472	2006	Verizon	Cambridge Assessors/Commissioner	
C279542	2006	Verizon	Springfield Assessors/Commissioner	
C279564	2006	Verizon	Worcester Assessors/Commissioner	
				
C285258	2007	Verizon	Belmont Assessors/Commissioner	
C285268	2007	Verizon	Cambridge Assessors/Commissioner	
C285341	2007	Verizon	Springfield Assessors/Commissioner	
C285361	2007	Verizon	Worcester Assessors/Commissioner	
				
C285242	2007	Springfield Assessors	Commissioner/Verizon	
C285502	2007	Worcester Assessors	Commissioner/Verizon	
				
C289475	2008	Verizon	Belmont Assessors/Commissioner	
C289495	2008	Verizon	Cambridge Assessors/Commissioner	
C289681	2008	Verizon	Springfield Assessors/Commissioner	
C289737	2008	Verizon	Worcester Assessors/Commissioner	
				
C290472	2008	Belmont Assessors	Commissioner/Verizon	
C290494	2008	Springfield Assessors	Commissioner/Verizon	
				
C295597	2009	Verizon	Belmont Assessors/Commissioner	
C295620	2009	Verizon	Cambridge Assessors/Commissioner	
C295851	2009	Verizon	Springfield Assessors/Commissioner	
C295918	2009	Verizon	Worcester Assessors/Commissioner 	
				
C296558	2009	Cambridge Assessors	Commissioner/Verizon	
C296346	2009	Springfield Assessors	Commissioner/Verizon	
C295259	2009	Worcester Assessors	Commissioner/Verizon	

 The docket numbers of all the individual appeals are listed in Appendix A by fiscal year, appellant and appellee. 
 The Board first made its rulings with respect to CWIP and poles and wires over public property in an Order dated March 3, 2008.
  Figures in bold in the chart above indicate the values challenged by both the municipality and by Verizon, while figures not in bold indicate the values challenged only by Verizon.
 Although as appellants, the municipalities had the burden of proving that the certified values were substantially too low, their brief and expert testimony focused on limiting any abatement to Verizon.
 For fiscal year 2005, the 25% additional economic obsolescence was applied to all property.  For the remaining fiscal years, the additional obsolescence was not applied to property in service less than one year.  
 Corporate telephone utilities are exempt from tax on all machinery except "machinery used in the manufacture or in supplying or distributing water."  G.L. c. 59, § 5, cl. 16(1).  This exemption results in only a telephone company's generators, which manufacture electricity, being subject to valuation and taxation as machinery used in manufacturing.

ATB 2017-19