BEFORE THE STATE BOARD OF EQUALIZATION

FOR THE STATE OF WYOMING

IN THE MATTER OF THE APPEAL OF             )

ARNOLA M. DAVIS FROM                              )

A DECISION OF THE CROOK COUNTY          )         Docket No. 2003-96

BOARD OF EQUALIZATION - 2003                 ) 

PROPERTY VALUATION                                )

DECISION AND ORDER

APPEARANCES

Arnola M. Davis, Petitioner, (Petitioner) appearing by and through James L. Edwards, of Stevens, Edwards & Hallock, P.C.

Susan Redding, Crook County Assessor, (Assessor) appearing pro-se.

DIGEST

This is an appeal from the Crook County Board of Equalization (County Board). The State Board of Equalization (State Board), comprised of Roberta A. Coates, Chairman, Alan B. Minier, Vice-Chairman and Thomas R. Satterfield, Member, considered the hearing record and decision of the County Board, briefs filed pursuant to a Briefing Order (Locally Assessed Property) issued September 18, 2003, and oral arguments that were heard on January 2, 2004. The Petitioner appealed a decision of the County Board affirming the Assessor’s valuation of the real property in Crook County, Wyoming, as non-agricultural. Petitioner asks the State Board to remand this case to the County Board with a directive that Petitioner’s property be assessed as agricultural and valued at productive value. We reverse the County Board’s decision as being arbitrary, capricious and an abuse of discretion and unsupported by substantial evidence.

PROCEEDINGS BEFORE THE COUNTY BOARD

The County Board conducted a hearing on July 2, 2003. An Order “Denying Protest for Agricultural Value” was entered August 5, 2003. A “Case Notice for Review” was filed with the State Board on August 22, 2003, and after receiving briefs the State Board heard oral arguments on January 2, 2004.

JURISDICTION

The State Board is required to “hear appeals from county boards of equalization.” Wyo. Stat. Ann. § 39-11-102.1(c). A timely appeal from the County Board decision was filed with the State Board. Wyoming State Board of Equalization Rules, Chapter 3, §2.

STANDARD OF REVIEW

When the State Board hears appeals from a county board, it acts as an intermediate level of appellate review. Laramie County Board of Equalization v. Wyoming State Board of Equalization, 915 P.2d 1184, 1188 (Wyo. 1996); Union Pacific Railroad Company v. Wyoming State Board of Equalization, 802 P.2d 856, 859 (Wyo. 1990). In its appellate capacity, the State Board treats the county board as the finder of fact. Id. In contrast, the State Board acts as the finder of fact when it hears contested cases on appeal from final decisions of the Wyoming Department of Revenue (Department). Wyo. Stat. Ann. §39-11-102.1(c). This sharp distinction in roles is reflected in the State Board Rules governing the two different types of proceedings. Compare Wyoming State Board of Equalization Rules, Chapter 2 and Wyoming State Board of Equalization Rules, Chapter 3. Statutory language first adopted in 1995, when the Board of Equalization and the Department of Revenue were reorganized into separate entities, does not express the distinction between the State Board’s appellate and de novo capacities with the same clarity as our long-standing Rules. 1995 Wyo. Sess. Laws, Chapter 209, Section 1; §39-1-304(a).

By Rule, the State Board’s standards for review of a county board’s decision are nearly identical to the Wyoming Administrative Procedure Act standards which a district court must apply to hold unlawful and set aside agency action, findings of fact, and conclusions of law. Wyo. Stat. Ann. §16-3-114(c)(ii). However, unlike a district court, the Board will not rule on claims that a county board has acted “[c]ontrary to constitutional right, power, privilege or immunity.” Wyo. Stat. Ann. §16-1-114(c)(ii)(B). The State Board’s review is limited to a determination of whether the county board action is:

(a) Arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law;

(b) In excess of statutory jurisdiction, authority or limitations or lacking statutory right;

(c) Without observance of procedure required by law; or

(d) Unsupported by substantial evidence.

Wyoming State Board of Equalization Rules, Chapter 3, § 9.

Since the State Board Rules are patterned on the judicial review provision of the Wyoming Administrative Procedure Act, we look to precedent under Wyo. Stat. Ann. §16-3-114(c) for guidance. For example, we must apply this substantial evidence standard:

Our task is to examine the entire record to determine if substantial evidence exists to support the [county board’s] findings. We will not substitute our judgment for that of the [county board] if [its] decision is supported by substantial evidence. Substantial evidence is relevant evidence which a reasonable mind might accept in support of the agency’s conclusions.

Clark v. State ex rel. Wyoming Workers’ Safety and Compensation Division, 934 P.2d 1269, 1272 (Wyo. 1997).

If land is assessed as agricultural it is valued on the objective value of what the land is capable to produce under normal conditions. The value is not set by what the land is actually producing but by what the soils, temperature, moisture and other factors would allow.

ISSUES

The Petitioner finds fault with the County Board’s decision in two areas:

1. Whether the County Board’s finding that the Petitioner’s land was not agricultural within the definition of Wyo. Stat. Ann. §39-13-103(b)(x)(B)(IV) was supported by substantial evidence and was not arbitrary, capricious, an abuse of discretion or not otherwise in accordance with law?

2. Whether the County Board properly found the Petitioner’s land was “land in transition” and therefore not agricultural land and if the finding was supported by substantial evidence and was not arbitrary, capricious, an abuse of discretion or not otherwise in accordance with law?

The Assessor’s Brief did not materially disagree with these two issues but added an issue that the land was platted and therefore not agricultural.

FACTS PRESENTED TO THE COUNTY BOARD

1.       Petitioner is the owner of 122.69 acres in Crook County, State of Wyoming. The land is located within the boundaries of a much larger historical ranch. A sales brochure calls this area “Kara Kreek Ranches”. [Exhibit 6; Transcript, pp. 15-16].

2.       The Assessor issued an Assessment Notice for Petitioner’s property on April 23, 2003. Petitioner filed an appeal from the assessment notice on May 13, 2003. [Record, pp. 002-005, 082].

3.       A hearing on the appeal was held by the County Board on July 2, 2003. [Record, p. 011].

4.       On June 4, 2003, Petitioner filed with the Assessor an Affidavit for Agricultural Land Classification for Assessment Year 2003. In the affidavit Petitioner represented that the land was being used for the cultivation of soil for production of crops and rearing, feeding, grazing or management of livestock. She represented that the land is not leased and that she has derived gross revenues of not less than five hundred dollars ($500.00) from the marketing of agricultural products from the subject land. [Transcript, p. 123]. She asserted that 41 acres were dry crop land with wheat, oats, millet and hay grass and that 80 acres was range land for cattle. [Record, pp. 157-158]. Petitioner testified that she had planted 12 acres of millet, 22 acres of grass for hay and the remainder of the land was used for range land and had been fenced for grazing. [Transcript, pp. 53-54, 115]. There is no residence on the property. [Transcript, p. 9].

5.       The land has been used for agricultural purposes from 1961 to present. [Transcript, pp. 15-16, 41-43].

6.       At the hearing the Petitioner presented a lease from George Strong to lease pasture from Petitioner and Dave Bannister for approximately five weeks in November and December at the rate of $10 per head per month for 146 cows. Mr. Strong paid both parties $1700.00 on December 20, 2002, for the lease. [Record, p. 139]. Petitioner received $425.00 from the lease. [Transcript, p. 114].

7.       The sellers of the property to Petitioner filed a “Dedication Map of 66' Public Access and Utility Easements of Kara Kreek Ranches, Located in Sections 3, 4, 5, 9 and 10, T49N, R64W, and Sections 32, 33 and 34, T50N, R64W, 6^th P.M., Crook County, Wyoming” with the Crook County Clerk on March 11, 2002. [Assessor’s Exhibit 5]. The County Clerk testified that even though the map had been filed in the Clerk’s Office, the map did not qualify as a subdivision map for recording purposes and she had not indexed the property as she had other subdivisions. The map had never been formally approved by the County Commissioners or any other governing body. We find that an easement map does not qualify as a plat, and thus the land is not disqualified from being classified as agricultural.

8.       The realtor, who sold the land to Petitioner, had developed a sales brochure that emphasized the recreational value of the property. [Assessor’s Exhibit 6]. The sales brochure does not disqualify the land from being classified as agricultural.

9.       The sellers developed an easement map to dedicate roads for access to the property and to dedicate rights of way for utilities. However, this map is not the equivalent of a plat. Mr. Patrick Donahue was the agent for the sellers of the land to Petitioner and he is still selling some of the original historical Kara Kreek Ranch. Mr. Donahue verified that the sellers of the Kara Kreek Ranch were not bound to sell the tracts as described in the easement map and in fact had not sold land in accordance with the tracts described on the map. [Exhibit 5]. If the map had been a plat the sellers of the historical ranch would have been required to file an amended plat to sell tracts of land other than that shown on the map. This is additional evidence that the map is not a plat.

10.     In preparation for the easement map, the owner of the property had the property surveyed and corner markers were placed. [Transcript, p. 77]. The survey and corner markers do not disqualify land from being classified as agricultural.

11.     Mr. Bruce Gose testified that he had previously owned the land and used it as part of a larger agricultural operation. Mr. Gose had assisted in planting some of the land.

12.     Mr. Donahue testified that the land was used in the past for grazing and hay production. He testified that the use of the land was more agricultural than it had been in the past. Cash crops are now being raised, and the hay bottoms are now being worked. [Transcript, pp. 67-68]. There is no evidence to contradict the use of the land for agricultural purposes or that the agricultural use was not to the productive capability of the land.

13.     The Assessor agreed at the hearing that three of the four criteria for classifying land as agricultural had been met, those being; 1) the use of the land for agriculture; 2) the agriculture use met the productive capability of the land; and 3) the gross revenue exceeded $500 if not leased and $1,000 if leased. [Record, pp. 18, 117]. Although an Assessor cannot bind the County Board, the Assessor’s acquiescence is evidence that the requirements of agricultural classification have been met. [Exhibit 5].

14.     The County Board denied Petitioner’s Protest for Agricultural Value on August 3, 2003.

15.     Petitioner appealed to the State Board by Case Notice for Review filed August 22, 2003.

DISCUSSION OF APPLICABLE LAW AND PETITIONER’S ISSUES

16.     Petitioner timely filed an appeal from the County Board decision.

17.     This Board has jurisdiction to hear and determine all issues raised by the Petitioner pursuant to Wyo. Stat. Ann. §39-13-109(b).

18.     The Wyoming Constitution, Article 15, §11 states that:

(a) All property, except as in this constitution otherwise provided, shall be uniformly valued at its full value as defined by the legislature, in three (3) classes as follows:

(i) Gross production of minerals and mine products in lieu of taxes on the land where produced;

(ii) Property used for industrial purposes as defined by the legislature; and

(iii) All other property, real and personal.

(b) The legislature shall prescribe the percentage of value which shall be assessed within each designated class. All taxable property shall be valued at its full value as defined by the legislature except agricultural and grazing lands which shall be valued according to the capability of the land to produce agricultural products under normal conditions. The percentage of value prescribed for industrial property shall not be more than forty percent (40%) higher nor more than four (4) percentage points more than the percentage prescribed for property other than minerals. (Emphasis added).

19.     Wyoming Statute §39-13-103(b)(ii) provides a bright line test:

(b) Basis for tax. The following shall apply:

* * *

(ii) All taxable property shall be annually valued at its fair market value. Except as otherwise provided by law for specific property, the department shall prescribe by rule and regulation the appraisal methods and systems for determining fair market value using generally accepted appraisal standards:

* * *

(x) The following shall apply to agricultural land:

* * *

(B) Contiguous or non contiguous parcels of land under one (1) operation owned or leased shall qualify for classification as agricultural land if the land meets each of the following qualifications:

(I) The land is presently being used and employed for an agricultural purpose;

(II) The land is not part of a platted subdivision;

(III) If the land is not leased land, the owner of the land has derived annual gross revenues of not less than five hundred dollars ($500.00) from the marketing of agricultural products, of if the land is leased land the lessee has derived annual gross revenues of not less than one thousand dollars ($1,000) from the marketing of agricultural products; and

(IV) The land has been used or employed, consistent with the land’s size, location and capability to produce as defined by department rules and the mapping and agricultural manual published by the department, primarily in an agricultural operation, or the land does not meet this requirement and the requirement of subdivision (III) of this subparagraph because the producer:

* * *

(C) If needed, the county assessor may require the producer to provide a sworn affidavit affirming that the land meets the requirements of this paragraph. When deemed necessary, the county assessor may further require supporting documentation.

(Emphasis added).

20.     Wyoming Statute Annotated Section 39-13-101(a)(iii) provides the following definition:

(iii) “Agricultural land,” as used in W.S. 39-13-103(b)(x), means land which meets the requirements of W.S. 39-13-103(b)(x) for the purpose of tax assessment;

21.     Wyoming Statute Annotated Section 39-13-101(a)(viii) provides the following definition:

(viii) “Agricultural purpose,” as used in W.S. 39-13-103(b)(x), means the following land uses when conducted consistent with the land’s capability to produce;

(A) Cultivation of the soil for production of crops; or

(B) Production of timber products or grasses for forage; or

(C) Rearing, feeding, grazing or management of livestock.

22.     Petitioner demonstrated that the land was used to grow crops, hay and graze cattle. This use is consistent with the statutory definition of “agricultural purpose”, and meets the first qualification for agricultural land.

23.     Petitioner testified that the annual gross revenue is greater than $500.00, and her testimony was not refuted. Petitioner met the second qualification for agricultural land.

24.     Mr. Donahue testified the land was being used for more agricultural purposes than in the past. In fact more land is being farmed and the hay is being cultivated more than in the past. This evidence was not refuted and therefore meets the requirement that the land has been used “consistent with the land’s size, location and capability to produce” which is another criteria to be classified as agricultural land. In paragraph 38 of its order the County Board found:

38.The protestant failed to show that the land was used for an agricultural purpose conducted consistent with the lands capability to produce agricultural products. The protestant’s use of the land alone by itself does not raise the expectation of monetary incentive consistent with the lands capability to produce. Only a small portion of the land was farmed and the Protestant had no idea what kind of crop she expected to get off of the land. The protestant did not even own a tractor.

We cannot ascertain evidence to support this conclusion. The Petitioner testified about the amount of land that was being farmed and grazed. The Petitioner’s lack of a tractor has nothing to do with the fact that the land is being tilled. There was no evidence the land was not being used to its capacity, in fact the unrefuted evidence is that the land was “more agricultural” than when it was part of a historical ranch. The observation that only a portion of land was being farmed does not indicate the land was not being employed consistent with the land’s ability to produce because much land in Wyoming cannot be farmed.

25.     The final qualification is whether the land is part of a platted subdivision. The County Board found the land was not platted. The Assessor argues the land is part of a platted subdivision. The Department of Revenue Rules, Chapter 10, Section 3 state:

(b) “Platted Subdivision” means for the purpose of Chapter 13 of Title 39, the creation of a lot, parcel or other unit of land; or division of a lot, parcel, or other unit of land into one or more parts that has received approval from the governing body in whose jurisdiction the property resides at the time of creation and is recorded in the records of the county clerk.

This land is part of a division of a unit of land and the division is recorded in the records of the county clerk as an easement map. However, the governing body, the Crook County Commissioners, did not approve the division of land. There was no evidence of the Commissioners ever reviewed the easement map. The County Clerk testified that the recorded map did not qualify as a subdivision. The Assessor argues that the formal approval of the division was not necessary to qualify for a platted subdivision because the Crook County Subdivision regulations exempts land that has this type of easement map from requiring a plat. This does not address the very language of the Rule because the Rule demands approval of the governing body. There is no evidence that the Crook County Commissioners formally approved the division. For a platted subdivision to occur, the minutes of the governing body need to reflect the formal action on the part of the governing body on that plat. Adopting an exemption is not formal approval.

The last qualification under the current statute was met for the land to be classified as agricultural.

26.     The Assessor argues that the Board decision In the Matter of the Appeal of Mark and Kathy Loveland, Docket 2001-144, 2002 WL 31440193, (Loveland) is controlling. The Loveland decision is not controlling because that matter was decided prior to the effective date of Laws 2002, Special Session, Chapter 92, §1, which was January 1, 2003. Under the old statute the term “primary purpose of obtaining a monetary profit,” Wyo. Stat. Ann. §39-13-103(a)(iii), was used. That language was repealed. The element of intent to obtain a profit was eliminated, and replaced by the measurement of gross revenue. The subjective test of “primary purpose” has been replaced by a bright line test of a specific dollar amount. The statutory change has negated the precedent of the Loveland case.

27.     The Department has adopted a rule, Chapter 10, Section 3, that guides Assessors about what are “non-agricultural lands”:

(c) “Non-agricultural lands” shall include but not be limited to such lands as:

* * *

(ii) Lands in active transition from agricultural use to residential, commercial or industrial use, which includes creation or division of a tract, parcel or other unit of land for the purpose of sale or development for such use.

While it is true that the land was divided the other portion of the Rule has not been met.

28.     All of the evidence demonstrates that the land is being used for agricultural purposes. The record is devoid of evidence that the land is going to be used for residential, commercial or industrial use. Since the language of the Rule has not been met, the County Board was arbitrary and capricious and abused its discretion in finding that the land in question was “land in active transition” in accordance with the Department’s Rule.

29.     The Petitioner argues that the “land in active transition” Rule exceeds the Department’s authority and is in conflict of the statute. We need not address this argument because the facts in this case do not support a finding that this land was “in transition.”

30.     The decision of the County Board affirming the Assessor’s classification of Petitioner’s property was not supported by substantial evidence, was not in accordance with procedures required by law, and was arbitrary, capricious and inconsistent with law.

ORDER

          IT IS THEREFORE HEREBY ORDERED that the Crook County Board of Equalization Order denying the Petitioner’s protest and affirming the 2003 assessment of Petitioner’s property is reversed and this case is remanded to the Crook County Board of Equalization to direct the Crook County Assessor to classify the land as agricultural and assess the land according to the capability of the land to produce agricultural products under normal conditions.

THIS SPACE INTENTIONALLY LEFT BLANK

Pursuant to Wyo. Stat. Ann. § 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 at the appropriate district court by filing a petition for review within 30 days of the date of this decision.

          Dated this 11^th day of February, 2004.

                                                                           STATE BOARD OF EQUALIZATION

          ________________________________

                                                                           Roberta A. Coates, Chairman

________________________________

                                                                           Alan B. Minier, Vice-Chairman

________________________________

Thomas R. Satterfield

ATTEST:

_________________________________

Wendy J. Soto, Executive Secretary