Phone pole ruling may be tax windfall

Local officials are voicing cautious satisfaction at a recent ruling by the state Appellate Tax Board that the poles and wires that Verizon owns over public ways can be taxed by cities and towns.

The March 3 decision, which applies to other cable and telephone companies as well, opens the way for municipalities to generate millions in new revenue. Until now, those telecommunications companies could be taxed only for poles and wires above private property and for underground wires.

Assessors and other city and town officials say they welcome the prospect of the new tax revenues. But, with Verizon expected to appeal the ruling, they caution that it is premature to say when or even if it might benefit them.

"I think it's good news for every community - if it holds up. There is the big 'if' there," said Amesbury chief assessor Mary Marino. "It would certainly bring in more cash to the communities."

"We are excited, but we can't get too excited," said Marlene Locke, chief assessor in Danvers.

Verizon spokesman Phil Santoro said last week the company has not yet filed an appeal, but plans to do so.

In a statement, the company said, "We're hopeful that the Legislature continues to focus on tax policy that encourages investment in Massachusetts, results in more job creation, and benefits consumers. That's how you grow the state's economy."

The Appellate Tax Board ruling addressed appeals that Verizon and municipalities filed over the values placed on Verizon property by the state Department of Revenue. Under state law, the revenue department assesses the value of telephone company property, which is then taxed locally).

If upheld, the ruling would accomplish one of the goals of Governor Deval Patrick's Municipal Partnership Act: the repeal of a law exempting Verizon from local taxes on its poles and wires over public ways. The exemption was put in place in 1915 to spur the extension of telephone service to rural areas, but critics contend it is outdated.

The Department of Revenue is collecting from phone companies a list of their poles and wires over public ways. With that data, it plans to notify local assessors on May 15 of the value of that property in their communities. Cities and towns will need to compile similar information from cable companies, whose property is assessed locally.

Revenue officials have advised cities and towns that, with that information, they can begin taxing companies for the poles and wires next fiscal year.

But because Verizon could win its appeal, Revenue officials have told municipalities not to spend the tax revenue. Instead, they must place the money in the funds to pay tax abatements. The money can be spent only if the ruling is upheld on appeal.

"The Department of Revenue doesn't want cities and towns to go spending this money and all of a sudden have to give it back and have to start laying off cops and teachers," said Lynn chief assessor Peter M. Caron.

The city of Boston has estimated that the ruling, if upheld, could generate $50 million in annual revenues for cities and towns. Only cities and towns that had filed relevant appeals with the Appellate Tax Board challenging the values set for Verizon property are eligible for retroactive tax payments - none of those communities are in the Globe North area. All communities are eligible to levy the tax going forward.

Boston and Newton were chosen as the lead cases in the proceeding before the board.

Caron also welcomes the ruling.

"What you have now is a sort of an illogical taxation system," he said, noting that poles and wires owned by electric utilities are taxed while those owned by telephone companies have not been. He said it was as if ranch homes were taxable while capes were not. "It's almost that way. You drive down the street and you can't tell which pole is an electric pole and which is a phone pole. So why are they taxed differently?"

Caron noted that assessors have tried to get the statute changed through legislation, now joined by the governor.

Should the ruling be upheld, Caron estimates Lynn would receive an additional $700,000 to $800,000 from Verizon annually, and "a few hundred thousand" from Comcast.

Saugus deputy assessor Ron Keohan calls the ruling "potentially" good news for the town.

"It's encouraging we are looking to help the homeowners for a change," he said. "When you're talking tax dollars, it seems the ones that generally get help are big business."

Salem's director of assessing, Frank Kulik, said that if the decision is upheld, "There will be more taxable property than before the Appellate Tax Board case. . . . With all the financial difficulties most communities are experiencing right now, any additional revenue source certainly will help."

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