SC 19288

Judicial District of New Britain


      Taxation; Whether Lessee of Waste-to-Energy Facility Lacked Standing to Challenge Assessor’s Valuation of Facility; Whether Trial Court Properly Declined to Apply Discounted Cash Flow Income Approach in Valuing Facility.  Wheelabrator Bridgeport, L.P. (Wheelabrator), is the lessee and operator of a waste-to-energy facility in Bridgeport.  In 2009, Wheelabrator brought a tax appeal (the 2009 appeal) to challenge the city tax assessor’s valuation of the facility for the assessment years of 2007 and 2008.  In 2011, Wheelabrator brought a second tax appeal (the 2011 appeal) to challenge the valuation for the grand list of 2010.  The city filed a motion to dismiss the 2009 appeal, claiming that Wheelabrator lacked standing to pursue it under General Statutes §§ 12-117a and 12-119, which provide that an owner or a lessee that is obligated to pay real property taxes under a recorded lease has the right to appeal a real property assessment.  In granting the motion to dismiss, the trial court rejected Wheelabrator’s claim that, because the city had repeatedly billed it for property taxes and had accepted its payment of the taxes, it had standing to appeal pursuant to General Statutes § 22a-270, which provides that the lessee of a waste-to-energy facility is liable for property taxes and has the right to appeal the amount of the assessment.  The court determined that § 22a-270 requires a lessee to comply with §§ 12-117a and 12-119 and that Wheelabrator failed to do so because the 2009 appeal, which misidentified the record owner of the property, failed to establish that Wheelabrator was required to pay property taxes under a recorded lease that was granted by the record owner.  As to the 2011 appeal, the court rejected the parties’ claim that the discounted cash flow income approach (income approach), which values property on the basis of the property’s income producing potential, should be used to appraise the subject property.  The court reasoned that the income approach lacked credibility because although the parties applied that approach, their resulting valuations differed by over $200 million.  The court also found that Wheelabrator’s appraisal was flawed because it assumed that the owner of the facility would pay over $29 million in maintenance costs and capital expenditures a mere one year before the useful life of the facility would expire and supposedly have no value.  The court next applied the reproduction cost approach, which values property by estimating the cost to construct an exact duplicate of the property being appraised, and it determined that the proper value of the facility was over $100 million more than Wheelabrator’s valuation.  Finally, the court concluded that there was insufficient evidence to support Wheelabrator’s claim that the assessment was illegal under § 12-119 because the city improperly (1) taxed Wheelabrator for tax-exempt pollution control equipment, (2) taxed the same equipment twice, and (3) charged Wheelabrator interest and penalties even though its tax bill was timely paid.  In this appeal, Wheelabrator argues that it had standing to file the 2009 appeal, that the court improperly rejected the income approach, and that the city engaged in misconduct while prosecuting this tax case.