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Hub can keep $16m in taxes

Utility’s property values at issue

By Beth Healy
Globe Staff / January 21, 2011

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The Supreme Judicial Court yesterday upheld a ruling by the state’s appellate tax board that lets the city of Boston keep $16 million in taxes that the utility National Grid had argued it did not owe.

The decision will likely mean more taxes for Boston from National Grid and other utilities in future years. It could also mean more tax revenues for cities and towns. The ruling essentially rejects National Grid’s argument that it should not pay taxes based on what its properties — including underground pipes — are worth today, but rather what the utility or its predecessors paid for them years or decades ago.

“This is a huge victory for the city,’’ said Ronald W. Rakow, Boston’s assessing commissioner. “We’re very pleased by the SJC’s action. They have affirmed the appellate tax board and the city’s valuation methodology.’’

National Grid, of London, owns the former Boston Gas Co. and argued that the value of its pipelines and other facilities have not increased over the years.

For example, National Grid said that its trademark painted tank alongside Route 93, just south of downtown Boston, will in a few years have a book value of zero.

The only value it planned to report to assessors was $300,000 for the original price of the land, said David L. Klebanoff, the city’s lawyer.

“They were arguing that 26 acres of land on Boston Harbor is worth $300,000, because that’s what they bought the land for a long time ago,’’ Klebanoff said.

National Grid, which has its Massachusetts headquarters in Waltham, said it was reviewing the decision.

“We always strive to operate the company in the most cost-effective manner for our customers, and, as part of this case on how to value utility property, we felt it important to do just that,’’ said spokeswoman Debbie Drew.

The court sent the matter back to the tax board for further consideration on some details. The city said it did not expect a significant change in National Grid’s tax bill from that review.

Klebanoff said the decision could be a boon to Massachusetts communities, which have assessed utility properties at low values and lost tax revenues as a result.

Michael Flynn, commercial assessor for the city of Newton, said, “Every single city and town will have to be taking another look’’ at the lists of assets that utilities supply yearly.

“The utility companies should be sending a more detailed list,’’ Flynn said. “Whether they will or they won’t is another story. But they should be, now that it’s been affirmed by the SJC.’’

Beth Healy can be reached at bhealy@globe.com.