BEFORE THE STATE BOARD OF EQUALIZATION
FOR THE STATE OF WYOMING
IN THE MATTER OF THE APPEAL OF )
CROOK COUNTY ASSESSOR FROM )
A DECISION OF THE CROOK COUNTY ) Docket No. 2001-143
BOARD OF EQUALIZATION - 2001 )
PROPERTY VALUATION )
(Watson Land Co.) )
FINDINGS OF FACT
CONCLUSIONS OF LAW
DECISION AND ORDER
Susan Redding, Crook County Assessor, Petitioner, appearing pro se.
James L. Edwards, Stevens, Edwards & Hallock, P.C., Gillette, Wyoming, appearing on
behalf of Watson Land Co., LLC (Taxpayer).
This matter was considered by the State Board of Equalization (State Board) consisting of Edmund J. Schmidt, Chairman, Roberta A. Coates, Vice-Chairman, and Sylvia Lee Hackl, Member, on written information pursuant to a Briefing Order (Locally Assessed Property) dated September 7, 2001. The appeal arises from a decision of the Crook County Board of Equalization (County Board) changing the classification, from residential to agricultural, of two parcels of land owned by Watson Land Co., LLC (Watson). Petitioner contends that the decision of the County Board was in error, and Watson's land was properly classified as residential, for two reasons:
1. Watson was not the legal owner of the properties on the assessment date, and thus lacked standing to appeal the classification;
2. The change in the classification of the properties from residential to agricultural was in violation of state statute and Department of Revenue rules, and was not supported by the evidence presented by Watson.
On appeal, the State Board must consider the following issue:
Was the County Board decision changing the classification of Watson's land from residential to agricultural supported by substantial evidence, in accordance with procedures required by law, and neither arbitrary, capricious, nor inconsistent with law?
JURISDICTION The State Board is mandated to "hear appeals from county boards of equalization . . . upon application of any interested person adversely affected" and to hold hearings after due notice pursuant to the Wyoming Administrative Procedure Act and prescribed rules and regulations. Wyo. Stat. 39-11-102.1(c). An appeal from a county board of equalization decision must be filed with the State Board within thirty (30) days from entry of the county board decision. Rules, Wyoming State Board of Equalization, Chapter 3, 2.
Watson Land Co., LLC, purchased two tracts of land located in Crook County, Wyoming, from the out-of-state landowner, Donna Dale Carnegie, in the spring of 2001. The two non-contiguous parcels were approximately 23 and 26 acres in size. Watson had been using the land to graze cattle for over thirty years, pursuant to an oral lease with the Carnegie family. The land had consistently been classified, and valued, as residential land. When Watson became the owner of the land, it appealed the classification to the County Board. The County Board held a hearing on July 16, 2001, during which both the Assessor and Doug Watson, as managing member of Watson Land Co., LLC, testified.
The Assessor testified that the land had been classified as residential since before her tenure as the Crook County Assessor. She believed the classification to be appropriate, given the size of the two parcels (each under 40 acres), the highest and best use of the land (residential) and the fact there was no information in her records for the preceding two years, indicating that the land was being used for agricultural purposes.
Doug Watson testified that the land had been used by his family for over thirty years to graze cattle. The land was used with the permission of the owners, the Carnegie family, although there was no written lease between the parties, only an oral agreement. Mr. Watson was unaware of the land's classification as residential until Watson Land Co., LLC, purchased the parcels in the spring of 2001.
At the conclusion of the hearing, County Board member Merle Clark made a motion to reclassify the land as agricultural. The motion died for lack of a second. The County Board took the matter under advisement and adjourned the hearing. Later that day, during the same meeting, Mr. Clark again moved to "grant Protest Hearing 2001-23 Watson Land Co. as agricultural Land." The motion carried unanimously. The County Attorney was instructed to prepare findings and an order, which order was considered and approved on July 25, 2001.
The Assessor filed a letter with the State Board on August 15, 2001, appealing the County Board's order.
FINDINGS OF FACT
1. On January 1, 2001, the Assessor issued assessments on two parcels of land in Crook County, Wyoming: parcel number 18-5060-19-2-00-002-00 containing 22.84 acres, and parcel number 18-5061-24-1-00-011-00, containing 26.28 acres. Both parcels were classified as residential, as they had been for at least ten years. The assessment was mailed to the owner of record, Donna Dale Carnegie, at an address in New York City, New York. [County Board Record, Exhibit 5, pp. 17-18; Audiotape of hearing].(1)
2. The owner had not previously contested the classification of the land as residential, nor had she reported using the land to graze livestock. [Audiotape of hearing].
3. In the spring of 2001, Watson purchased the land from the Carnegie family. [Audiotape of hearing].
4. After purchasing the land, Watson became aware of the land's classification as residential. Doug Watson, as managing member, went to the Assessor's office and completed a Land Classification Questionnaire, indicating that the land was being used to graze cattle, and that a profit of over $1,000 was expected. Mr. Watson also answered Question 7 on the form in the affirmative, which question asked: "Was the Land employed the previous two (2) years used [sic] for the primary purpose of obtaining a monetary profit as agricultural or horticultural use or any combination thereof." Although Mr. Watson signed the form, he neither dated it nor had it notarized, contrary to the form's instructions. He also did not complete the line asking for the date upon which the land was acquired, simply listing "2001," rather than indicating the day and month as well in the spaces provided: "Date land acquired: ______ / ______ / 2001 ." [County Board Record, Exhibit 4, pp. 13-16].
5. The Assessor did not change the classification of the land, for two reasons. First, she believed that Watson did not have standing to challenge the classification, because Watson had not been the owner of the property on January 1, 2001. Second, she could not change the classification because she did not have any proof in her records that the land had been used for agricultural purposes for the preceding two years, a requirement she felt was imposed by state statute and the Department of Revenue's rules. [Audiotape of hearing].
6. Watson then appealed the assessment to the County Board by filing a "Notice of Protest." [County Board Record, Exhibit 2, pp. 4-7]. The protest letter was not dated, nor was it notarized, as required by the form itself, and by the County Board rules. Rules of Practice and Procedure for Appeals Before the County Board of Equalization Involving Taxation Matters (adopted 5/6/97), Chapter 1, Section 6(a).
7. The County Board held a hearing on July 16, 2001. The Assessor first raised the question of Watson's standing to challenge the assessment, since it was not the owner of the land on the assessment date. She then testified that the two parcels had historically been classified as residential. She said the classification was appropriate, for two reasons. First, each parcel was less than 40 acres, and thus the default classification was residential, pursuant to the Department of Revenue's rules. Second, there was no evidence in her records indicating the land had been used for agricultural purposes during the preceding two years. The Assessor testified she read both state law, and the Department of Revenue's rules, to require proof of use for two years before a land classification could be changed to agricultural. The Assessor further admitted that, but for the two-year requirement in the rules, she would classify the land as agricultural, because she believed it was being used for agricultural purposes. [County Board Record, Exhibit 5, pp. 19-20; Audiotape of hearing].
8. Doug Watson testified that his family had grazed cattle on the land for 32 years, pursuant to an "oral lease" between his family and the landowner, Donna Dale Carnegie. The agreement allowed the Watsons to graze cattle on the land in exchange for maintaining the property. [Audiotape of hearing].
9. Mr. Watson testified that Watson purchased the two parcels of land in the spring of 2001. At that time, he became aware of the land's classification, and attendant valuation as residential. When the Assessor did not change the classification after the Land Classification Questionnaire was completed, Watson appealed the matter to the County Board. [County Board Record, Exhibit 2, pp. 4-7, Exhibit 4, pp. 13-16; Audiotape of hearing].
10. The County Board issued its decision on July 25, 2001. Although the order is captioned as "Order Approving Assessor's Valuation," and the motion to approve the order was phrased in the same manner, in fact the order overturns the Assessor's determination and mandates that the land be classified as residential. [County Board Record, pp. 22-28; Audiotape of hearing].
11. Petitioner filed her Notice of Appeal with the State Board on August 15, 2001.
12. Any Discussion above or Conclusion of Law below which includes a finding of fact may also be considered a Finding of Fact and, therefore, is incorporated herein by this reference.
CONCLUSIONS OF LAW
13. Petitioner's Notice of Appeal was timely filed and the State Board has jurisdiction to determine this matter.
14. This State Board's inquiry is limited to whether the re-classification of Watson's land, as ordered by the County Board is: (a) arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law; (b) in excess of statutory jurisdiction or authority; (c) without observance of procedures required by law; or (d) unsupported by substantial evidence. Rules, Wyoming State Board of Equalization, Chapter 3, 9.
15. At the outset, we must consider Petitioner's claim that Watson did not have standing to contest the classification and assessment, since it was not the property owner of record on January 1, 2001. Petitioner relies on the State Board's decision in Appeal of Donald E. Bender, 2000 WL 1929389 (Wyo. St. Bd. Eq. 2000-128) in support of her argument. In Bender, the petitioner sought to challenge the assessments on numerous properties in which he held no legal or equitable interest. The State Board ruled that he had no standing to proceed with those challenges.
16. The Wyoming Supreme Court stated that the rules regarding standing are to be applied in a pragmatic manner:
"Standing is a concept used to determine whether a party is sufficiently affected to insure that a justiciable controversy is presented to the court.
* * * It is a necessary and useful tool to be used by courts in ferreting out those cases which ask the courts to render advisory opinions or decide an artificial or academic controversy without there being a palpable injury to be remedied. However, it is not a rigid or dogmatic rule but one that must be applied with some view to realities as well as practicalities. Standing should not be construed narrowly or restrictively."
Amax Coal v. State Board of Equalization, 819 P.2d 825, 831 (Wyo. 1991), quoting Washakie County School Dist. No. One v. Herschler, 606 P.2d 310, 317 (Wyo. 1980), cert. denied, 449 U.S. 824 (1980)(emphasis added in Amax).
" 'A litigant is said to have standing when he has a "personal stake in the outcome of the controversy." This personal stake requirement has been described in Wyoming as a "tangible interest" at stake.' " Robinson v. Hamblin, 914 P.2d 152, 154 (Wyo. 1996), quoting Schulthess v. Carollo, 832 P.2d 552, 556-557 (Wyo. 1992).
17. Section 39-13-109(b)(i) of the Wyoming Statutes provides in pertinent part that "[a]ny person wishing to contest an assessment of his property" shall timely file an appeal. While Bender articulates the requirement that an individual have standing to appeal a tax assessment, it does not require that the party be the legal owner on the date of the assessment. The State Board has heard appeals from petitioners other than the record owner, when those persons had a tangible interest in the case. Appeal of Floyd Bishop, 1990 W.L. 284530 (Wyo St. Bd. Eq. 90-147).
18. In this case, Watson was the landowner at the time the appeal was filed. Thus, Watson clearly had a "tangible interest" in the classification and subsequent valuation of the land. The fact that Watson was not the owner on the day the valuation was made, January 1, 2001, does not divest Watson of the right to appeal assessments on land it subsequently purchased, so long as those appeals were timely filed in accordance with state law and County Board rules. Thus, we conclude that Watson, as the property owner and taxpayer as of the date of the appeal, had and has standing to contest the Petitioner's classification of its land.
19. Next, we turn to the question of whether there is substantial evidence in the record that reasonably supports the conclusion reached by the County Board. As a reviewing body, we will not substitute our judgment for findings reasonably supported by evidence in the County Board record. Laramie County Board of Equalization v. State Board of Equalization, 915 P.2d 1184, 1189 (Wyo. 1996); Amax Coal, 819 P.2d at 825; Sage Club, Inc. v. Employment Security Commission, 601 P.2d 1306, 1310 (Wyo. 1979). While substantial evidence may be less than the weight of the evidence, it cannot be clearly contrary to the overwhelming weight of the evidence. As the Wyoming Supreme Court has stated, substantial evidence "is more than a mere scintilla of evidence or suspicion of a fact to be established." Mountain Fuel Supply Company v. Public Service Commission, 662 P.2d 878, 882 (Wyo. 1983). "Substantial evidence is relevant evidence which a reasonable mind might accept in support of the conclusions of the agency." Amax Coal, 819 P.2d at 828.
20. The Wyoming Supreme Court has held that "an agency's action is arbitrary and capricious and must be reversed if any essential finding is not supported by substantial evidence." Amax Coal West, Inc. v. State Board of Equalization, 896 P.2d 1329, 1335 (Wyo. 1995), citing Majority of Working Interest Owners in Buck Draw Field Area v. Wyoming Oil and Gas Conservation Commission, 721 P.2d 1070, 1079 (Wyo. 1986), and Amax Coal v. State Board of Equalization, supra. "Substantial evidence is that quantum of relevant evidence which would be accepted by a reasonable mind as adequate to support the conclusion." Gray v. Wyoming State Board of Equalization, 896 P.2d 1347, 1348 (Wyo. 1995). The taxpayer requesting agricultural classification for property has the burden of proving compliance with the statutory requirements for that classification. Appeal of the Natrona County Assessor(Pedro/Aspen, Ltd.), 1996 W.L. 308448 (Wyo. St. Bd. Eq. 94-270).
21. Section 39-13-1-1(a)(iii) of the Wyoming Statutes defines agricultural land as "land which has been used or employed during the previous two (2) years and presently is being used and employed for the primary purpose of obtaining a monetary profit as agricultural or horticultural use or any combination thereof . . .." The Department of Revenue's rules reiterate this definition, and add, "Agricultural land shall generally include land actively farmed or ranched to obtain a fair rate of return." Rules, Wyoming Department of Revenue, Chapter 10, Section 3(a) (February 11, 1999). The Department of Revenue's rules further define "primary purpose of obtaining a monetary profit" as:
[T]he owner shall pursue agricultural or horticultural activity for a reasonable profit or at least upon the expectation of reasonable profit consistent with the productive capability of the land in question. The profit or reasonable expectation thereof shall be viewed from the standpoint of the fee owner and measured on the basis of the productive capability of the land in question.
Rules, Wyoming Department of Revenue, Chapter 10, Section 3(a)(ii).
22. The Department's rules also define "non-agricultural lands" as "[p]arcels of land forty (40) acres or less, whether subdivided or not, unless the landowner provides proof that such land should otherwise be classified as agricultural land." Rules, Wyoming Department of Revenue, Chapter 10, Section 3(c)(x) [emphasis supplied].
23. The Assessor classified the two parcels of land as residential, consistent with the previous classifications, and in accordance with the Department of Revenue's rules. She then valued the land accordingly. An assessor's valuation is presumed valid, accurate and correct, which presumption survives until overturned by credible evidence. Basin Electric Power Coop. v. Dept. of Revenue, 970 P.2d 841, 851 (Wyo. 1998). The burden was on Watson to demonstrate that the land - two parcels of less than 40 acres each - was being "used or employed during the previous two (2) years and presently [was] being used and employed for the primary purpose of obtaining a monetary profit as agricultural or horticultural use." Wyo. Stat. 39-13-1-1(a)(iii); Rules, Wyoming Department of Revenue, Chapter 10, Section 3(c)(x); Appeal of the Natrona County Assessor (Pedro/Aspen, Ltd.), supra.
24. In this case, the only evidence of record supporting Watson's contention that the land should be classified as agricultural was the oral testimony of Doug Watson, as managing member, and a "Land Classification Questionnaire," which was signed but neither dated nor notarized. Mr. Watson testified that the land had been used by his family to graze cattle for over thirty years, but he produced no evidence of any lease, nor any other documentation that the owner of the land during the preceding two years - Donna Dale Carnegie - knew the land was being used for that purpose or that she had the primary purpose of obtaining a monetary profit from such use of the land. Oral testimony, unsupported by adequate documentary evidence, has been deemed insufficient to justify classifying land as agricultural. Appeal of K. M. Reeb, 1998 W.L. 918633 (Wyo. St. Bd. Eq. 97-228); Appeal of Natrona County Assessor (Marshall), 1996 W.L. 308470 (Wyo. St. Bd. Eq. 94-276); Appeal of the Albany County Assessor (Bishop), 1991 W.L. 214673 (Wyo. St. Bd. Eq. 91-91); see also Appeal of Natrona County Assessor (Pedro/Aspen, Ltd.), supra (documentation such as written lease or income tax schedule necessary).
25. Watson did not carry its burden of affirmatively documenting compliance with the statutory requirements to justify an agricultural classification. Appeal of the Natrona County Assessor (Pedro/Aspen, Ltd.), supra. Thus, the County Board's decision is not supported by substantial evidence action, and its order reversing the Assessor's classification and valuation of Watson's land is arbitrary and capricious and must be reversed. Amax Coal West, Inc. v. State Board of Equalization, supra, citing Majority of Working Interest Owners in Buck Draw Field Area v. Wyoming Oil and Gas Conservation Commission, supra, and Amax Coal v. State Board of Equalization, supra.
26. Mention must be made at this point of the Assessor's contention, that she is required by state law and Department of Revenue rule to have evidence in her files of agricultural use for the preceding two years before she can classify land as agricultural. Neither state statute, Department of Revenue rule, nor any of the State Board's decisions establish this as a requirement. Instead, what is required is that the landowner, at the time the classification/assessment is requested, provide adequate evidence of agricultural use, both at the present time and for the preceding two years. See, e.g. Appeal of the Laramie County Assessor (Steele), 1997 W.L. 345863 (Wyo. St. Bd. Eq. 96-109)(taxpayers testified and provided documentary evidence of past, current and intended future use).
27. Finally, we review the procedures followed by the County Board to determine whether its actions were in accordance with law. The County Board rules require that "[a]ny person wishing to contest an assessment of his property shall file not later than thirty (30) days after the date or postmark of the assessment schedule, whichever is later, a statement under oath with the County Clerk as Clerk of the County Board of Equalization specifying the reasons why the assessment is incorrect on the form provided by the Board." County Board Rules, Chapter 1, Section 6(a). In this case, the assessment notices were not introduced as exhibits. Thus, the County Board had no evidence of the date upon which the assessments were issued or mailed. Furthermore, the "Notice of Protest" filed by Watson was neither dated nor notarized. The appeal thus was not instituted in accordance with the County Board's rules, requiring a "statement under oath." The County Board also had no way to determine whether the appeal was filed in a timely manner, since the assessment notices were not a matter of record, and the protest letter was neither dated nor notarized. The appeal thus was not initiated in accordance with the County Board rules, and the County Board could not ascertain whether it was timely and therefore whether the County Board even had jurisdiction to consider the matter.
28. In addition, the record does not reflect that the hearing itself was conducted in accordance with the County Board rules. Section 8 of the Rules sets forth the procedure to be followed at the hearing. The Hearing Officer "shall announce that the contested case is convened and shall state the protest to be heard. The Hearing Officer shall read the Protest into the record and shall identify the parties appearing." County Board Rules, Chapter 1, Section 8(a). The tape recording of the hearing in this case does not reflect that the hearing was started in compliance with the rules. At the beginning of the tape is a garbled conversation between two or more women, involving a purse. Eventually, a woman's voice - presumably that of the Assessor - is heard discussing the classification of the land. At no time does the record indicate that witnesses were sworn, nor are the speakers identified. While it is possible to determine when the Assessor and Mr. Watson are speaking, by listening to the voices and noting when questions are asked of "Susan" or "Doug," it is not possible to tell which member of the County Board is speaking. Furthermore, the presentation of evidence was not handled in an orderly manner, nor was it in compliance with the County Board rules. The County Board Rules, Chapter 1, Section 8(d), provide the Petitioner shall present its case first, and that each party and all witnesses are subject to cross-examination. In this case, however, the Assessor was required to present her evidence first, rather than Watson, as the Petitioner. The Assessor was asked several questions, by both Watson and the County Board. However, Doug Watson, on behalf of the Petitioner, never presented a case, nor was there any structured questioning of Mr. Watson. This hearing was not the type of structured presentation of evidence contemplated by the Administrative Procedure Act, Wyo. Stat. 16-3-101 et seq., nor was it in compliance with the County Board's own rules. County Board Rules, Chapter 1, Section 8(d).
29. The Wyoming Supreme Court has held that "[t]he failure of an agency to abide by its rules is per se arbitrary and capricious." State ex rel. Workers' Compensation Division v. Brown, 805 P.2d 830, 835 (Wyo. 1991). In this case, the County Board's failure to require adherence to its own rules in the initiation of an appeal, and to abide by its own rules in the conduct of the hearing, require us to reverse its decision on that basis as well.
30. The State Board thus finds that the County Board's decision was arbitrary, capricious, and otherwise not in accordance with law, without observance of procedures required by law and unsupported by substantial evidence.
THIS SPACE INTENTIONALLY LEFT BLANK
IT IS THEREFORE HEREBY ORDERED:
The decision of the Crook County Board of Equalization granting agricultural classification to the property at issue shall be, and the same is, hereby reversed, and the original classification as residential land shall be reinstated.
Pursuant to Wyo. Stat. 16-3-114 and Rule 12, Wyoming Rules of Appellate Procedure, any person aggrieved or adversely affected in fact by this decision may seek judicial review in the appropriate district court by filing a petition for review within 30 days of the date of this decision.
DATED this 15th day of February, 2002.
STATE BOARD OF EQUALIZATION
Edmund J. Schmidt, Chairman
Roberta A. Coates, Vice-Chairman
Sylvia Lee Hackl, Member
Wendy J. Soto, Executive Secretary
1. It should be noted that neither assessment notice appears in the record. The only documentation concerning the assessment of the land is a property history card displaying data for one of the parcels. This card, Exhibit 5, is dated July 16, 2001 (the date of the County Board hearing), and lists Donna Dale Carnegie as the owner. The rest of the information concerning the assessment of the land comes solely from the testimony at the hearing.