BEFORE THE STATE BOARD OF EQUALIZATION
FOR THE STATE OF WYOMING
IN THE MATTER OF THE APPEAL OF )
GERHARDT J. & LOIS L REINS FROM )
A VALUATION DECISION OF THE ) Docket No. 2006-84
FREMONT COUNTY ASSESSOR )
2005 PROPERTY VALUATION )
FINDINGS OF FACT, CONCLUSIONS OF LAW, DECISION AND ORDER
Gerhardt J. & Lois L. Reins (Petitioners or Taxpayers), appearing pro se, did not file a brief or statement.
James Whiting, Deputy Fremont County and Prosecuting Attorney, on behalf of Eileen Oakley, Fremont County Assessor (Respondent or Assessor).
STATEMENT OF THE CASE
This matter originally came before the State Board of Equalization (State Board) as an appeal by the Fremont County Assessor from a decision of the Fremont County Board of Equalization (County Board). The Assessor appealed the County Board decision directing her to re-assess the Taxpayers’ property using an agricultural classification. The State Board, comprised of Alan B. Minier, Chairman, Thomas R. Satterfield, Vice-Chairman, and Thomas D. Roberts, Board Member, considered the hearing record and decision of the County Board. Neither party requested oral argument. The State Board entered a Decisions and Order dated July 13, 2006, remanding the Assessor’s appeal to the County Board for further proceedings. Fremont County Assessor (Reins Property), Docket No. 2005-89, July 13, 2006, ___ WL ___ (Wyo. St. Bd. Eq.). In response, on August 14, 2006, the County Board requested, pursuant to Rules, Wyoming State Board of Equalization, Chapter 2, § 36, that the original appeal by Taxpayers of the Assessor’s denial of their request for agricultural status be certified to the State Board for its consideration as the finder of fact rather than as an intermediate level of appellate review. Wyo. Stat. Ann. § 39-11-102.1(c). Compare Rules, Wyoming State Board of Equalization, Chapter 2 and Rules, Wyoming State Board of Equalization, Chapter 3. 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). The State Board granted certification by order dated August 24, 2006. The appeal of the Taxpayers from the Assessor’s agricultural status denial is thus before this Board the same as an initial appeal pursuant to Rules, Wyoming State Board of Equalization, Chapter 2.
The State Board has reviewed and carefully considered all the evidence presented at the County Board hearing, including a tape recording of the testimony. There was no issue of credibility of the witnesses with respect to the matters which dispose of this case, thus a repeat of their testimony to this Board is not necessary. We have also been provided, in the context of the Assessor’s original appeal to this Board, sufficient briefing on the relevant issues, thus the receipt of further briefing is not required.
Within 30 days after the date or postmark date of an assessment schedule, whichever is later, objections to local assessments must be filed with the county assessor indicating why the assessment is incorrect. Wyo. Stat. Ann. §39-13-109(b)(i). The Taxpayers’ assessment schedule was dated April 25, 2005. Taxpayers’ protest was filed with the County Assessor on May 25, 2005. The Assessor’s denial of agricultural status was dated May 18, 2005. The Taxpayers’ appeal is timely.
CONTENTIONS AND ISSUES
Taxpayers assert the County Assessor improperly denied agricultural valuation in 2005 for their property. We affirm the Assessor’s denial of agricultural status.
FINDINGS OF FACT
1. Gerhardt and Lois Reins own and reside on 18.5 acres at 2209 North 2nd Street near Lander, Wyoming. The property was formerly known as Lot 1 of the O’Brien Subdivision in Fremont County, Wyoming. [Board Record, Exhibit A, p. 12].
2. Eileen Oakley is the Fremont County Assessor. [Board Record, Hearing Tape].
3. The Assessor sent the Taxpayers an Assessment Schedule listing the total market value of their property as $459,400, on April 25, 2005. Of this total, $130,700 was the value of the Taxpayers’ land at issue in this proceeding. [Board Record, Exhibit A, p. 12].
4. The Taxpayers applied for agricultural status for their property on May 5, 2005, using the Fremont County Affidavit for Agricultural Classification 2005 Assessment Year form. [Board Record, Exhibit P, pp. 73-77].
5. On May 18, 2005, the Assessor denied the application for agricultural classification stating the information furnished did not meet the definition for agricultural land as set forth in the Wyoming statutes and rules. The Assessor gave the following reasons:
Property has characteristics of a subdivision or is in transition for further development.
Primary purpose or use of the land is other than producing a marketable agricultural product, i.e. home site, cabin site, or dude ranch facilities.
The land is not being used or employed consistent with the land’s size, location and capability to produce.
The owner/lessee does not report or pay taxes on farm machinery or other agricultural equipment.
Activities on the land, which appear agricultural in nature, do not by themselves qualify the land for agricultural assessment.
[Board Record, Exhibit P, p. 72].
6. The Assessor’s denial letter also informed Taxpayers they could submit additional information which may affect their land’s classification to the Assessor’s office. The Taxpayers were informed they could file a protest with the County Board within 30 days of the assessment notice if they disagreed with the Assessor’s decision. [Board Record, Exhibit P, p. 72].
7. The Taxpayers filed a Statement To Contest 2005 Property Tax Assessment with attachments on May 25, 2005. [Board Record, Exhibit 1, pp. 90-111].
8. Mr. Reins testified he purchased the tract of land at issue in 1996 for the purpose of raising crops because he had horses. The Taxpayers built a barn in 2002, and a shop in 2003. In 2004, they built a residence on the property. [Board Record, Hearing Tape].
9. The Taxpayer testified the land was being developed as agricultural. Until last year, the Taxpayers were absentee landowners. Because they lived in Meeteetse and had hired help to bring the land into production, the land was not producing what it was capable of producing. In 2005, Taxpayers were living on the property and it looked like the hay crop would be good. [Board Record, Hearing Tape].
10. Mr. Reins was protesting the denial of agricultural status under Wyoming Statute Title 39. In his opinion, the land was presently being used for agricultural purposes. [Board Record, Hearing Tape].
11. Mr. Reins asserted the land was not part of a subdivision. The Taxpayers produced their 2004 Federal Income Tax form 1040, Schedule F, showing $2,475 income. Receipts were also produced indicating income of $1,265 from the sale of a mare and colt, and $520 from the sale of 6.5 tons of hay. [Board Record, Hearing Tape; Exhibit 1, pp. 97-100].
12. Mr. Reins said additional hay was produced on the property, and he did sell another 12 tons during the last two months. He sold more hay but did not get receipts for those sales. The total amount of hay raised during 2004 season was 32 tons. [Board Record, Hearing Tape; Exhibit 1, p. 91].
13. The Taxpayers also use the land to graze eight head of horses. [Board Record, Exhibit 1, p. 91]. Mr. Reins stated he raised and sold a couple of mares and foals, and will continue to do so in the future. He sold mares last year because he was building the house, and did not have time to take care of the horses properly. He also boards horses in exchange for labor on his property. [Board Record, Hearing Tape].
14. Eileen Oakley testified she was the Fremont County Assessor and was certified as a property tax appraiser by the Department of Revenue (Department). [Board Record, Hearing Tape].
15. The Assessor presented a complete description of the Taxpayers’ property. The market value of the property was determined by using the CAMA (Computer Assisted Mass Appraisal) system authorized by the Department. [Board Record, Exhibit B, p. 13]. Only the residential classification of the Taxpayers’ land is in dispute. [Board Record, Hearing Tape, Exhibit R, p. 85].
16. The Assessor testified to qualify for agricultural classification a property must meet the conditions of the statutes and rules that govern agricultural classification. The statutes outline those conditions and Chapter 10 of the Department’s Rules further define the conditions. [Board Record, Hearing Tape; Exhibit I, pp. 40-43].
17. The Assessor stated in order to meet agricultural classification there were four qualifications, all of which must be met. The initial qualification is that the land be used to produce forage. There were, however, other qualifiers. The Assessor must consider that certain activities which appear to be agricultural in nature do not by themselves qualify land for the agricultural classification. The Assessor must consider all requirements, not just the appearance of the land. [Board Record, Hearing Tape; Exhibit R, p. 86].
18. The Assessor must also consider whether the land is part of a platted subdivision. The Assessor conceded the Board of County Commissioners had vacated the O’Brien Subdivision but believed the vacation contravened the intent of the statutes on subdivisions. [Board Record, Hearing Tape; Exhibit R, p. 86].
19. The Assessor testified the parcels in the O’Brien Subdivision were required to be platted at the time they were formed, and those parcels would be required to be platted if they were formed today. [Board Record, Hearing Tape; Exhibit K, p. 45; Exhibit R, p. 86].
20. The Assessor testified the owners of the lots waited until the subdivision was fully developed to begin the process of vacation. These lots were sold as residential lots. The original restrictive covenants stated the purpose was to insure the use of the property for attractive country living, residential purposes only. The restrictive covenants allowed some animals but the use was regulated by the Architectural Control Committee. [Board Record, Exhibit D, pp. 18-23]. The amended covenants filed with the vacation of the subdivision changed the wording of the original restrictive covenants minimally, adding the word “agricultural” to the use. In the revised restrictive covenants, the Architectural Control Committee still controlled the use of the land. [Board Record, Exhibit F, pp. 28-36].
21. The Assessor urged that the statutes and rules require agricultural land be used or employed primarily in an agricultural operation, where primarily means chiefly or the first importance. The Taxpayers’ land is defined by its own restrictive covenants as residential, with animal and agricultural use being limited by the Architectural Control Committee. [Board Record, Hearing Tape].
22. The Assessor must also consider whether the owners of the land derived annual gross revenue of not less than $500. [Board Record; Exhibit P, p. 75]. The Taxpayers’ IRS Form 1040, Schedule F Profit or Loss From Farming, showed a gross income of $2,475. [Board Record, Exhibit 1, p. 98]. The Taxpayers’ receipts indicated income of $1,265 from the sale of a mare and colt and $520 from the sale of 6.5 tons of hay. [Board Record, Exhibit P, p. 75].
23. The fourth qualification for agricultural status was quoted by the Assessor from the statute. “The land has been used or employed, consistent with the land’s size, location and capability to produce as defined by the department rules and the mapping and agricultural manual published by the department, primarily in the agricultural operation...,” where primarily means chiefly or of the first importance. The Assessor pointed out the Taxpayers’ own covenants established that the land was residential with animals and agricultural use being limited. Therefore, the Assessor concluded the land’s primary use was residential. The parcel had significant residential improvements as described in the CAMA printouts. [Board Record; Exhibit B, p. 13].
24. The Assessor stated that she applied the Department’s Rules equally and uniformly. Regardless of the fact that people feel they have used property as best they can and produced as much as they can, the land had to meet the standards of a true agricultural operation to assess everyone equally. [Board Record, Hearing Tape].
25. The Assessor prepared a quantitative analysis to determine whether the Taxpayers had used their land consistent with the land’s capability to produce. [Board Record, Exhibit R, pp. 87-88]. She first subtracted two acres from the Taxpayers’ total acreage of 18.5 acres, in order to account for a residential farmstead as required by the Department’s Rules. Rules, Wyoming Department of Revenue, Chapter 10, § 3(c)(iv). [Board Record, pp. 40-43; Exhibit R, p. 87]. She then determined a productive capacity for the remaining 16.5 acres using elements of the methods prescribed by the Department for valuation of all agricultural lands. [Board Record, Exhibit R, p. 87].
26. The Assessor used the Lander Area Soil Survey to determine the soil type of the Taxpayers’ property. [Board Record, Exhibit R, p. 87; Exhibit J, p. 44]. She overlaid ownership information on the soil survey map to do so. [Board Record, Exhibit R, p. 87; Exhibit J, p. 44; Exhibit K, p. 45].
27. The Assessor determined the productive value of the Taxpayers’ soil type using the 2005 Ag Land Valuation Study authorized by the Department. [Board Record, Exhibit M, pp. 47-61]. The Assessor determined: (1) the pertinent Land Resource Area, and (2) the productive class of the land. [Board Record, Exhibit R, p. 87; Exhibit M, p. 54]. These numbers were translated into a standard productive range for irrigated crop land, expressed in tons of hay per acre. [Board Record, Exhibit R, p. 87; Exhibit M, p. 54]. The resulting range of production for the Taxpayers’ property was from three to four tons per acre. [Board Record, Exhibit R, p. 87; Exhibit M, p. 54]. Using the chart identified by the Assessor, those values appear for Land Resource Area 4-5, Class III. [Board Record, Exhibit M, p. 54].
28. The Assessor next multiplied the Taxpayers’ total acreage (exclusive of farmstead), or 16.5 acres, times the low end of expected production per acre of three tons per acre, to reach an expected total production of 50 tons of hay. [Board Record, Exhibit R, p. 87]. She then multiplied this expected total tonnage by a low revenue estimate of $70 per ton of hay, and rounded down to reach an expected total of $3,500 revenue for the Taxpayers’ property. [Board Record, Exhibit R, p. 87].
29. Finally, the Assessor compared this expected revenue, prepared using low-end estimates at each step, with the Taxpayers’ actual revenue of $2,475. Supra, ¶ 11. In the Assessor’s judgment, the Taxpayers’ failure to achieve the low-end revenue estimate demonstrated that the Taxpayers were not using their land consistent with its capability to produce. [Board Record, Exhibit R, pp. 87-88].
30. The Assessor testified a portion of the Taxpayers’ production may have been used to feed horses. Such use would not qualify as agricultural because of the Department’s Rules. Chapter 10, Section 3(ii)(B)(II), of those rules states “grazing on land by any animal kept as a hobby will not be considered agricultural.” If hobby animals were using part of the production, marketable production would be less than the land’s capability to produce, and would not be agricultural land. [Board Record, Hearing Tape; Exhibit I, p. 41].
31. The Assessor reviewed the records of other small acreage parcels between 5 and 20 acres. The Assessor testified only five small acreage parcels had an agricultural value. There were 247 other small acreage parcels valued as residential. The Assessor advised that her office is receiving more and more applications for agricultural use. Agricultural status is considered at the time of application. Her office has consistently and uniformly valued these small parcels as residential. [Board Record, Hearing Tape; Exhibit N, pp. 63-64; Exhibit O, pp. 65-71].
32. In conclusion, the Assessor argued that while the Taxpayers’ parcel had activities which appear to be agricultural, they did not meet all of the requirements for agricultural classification. While the land was agricultural prior to being subdivided, the parcels were subsequently sold and used primarily as residential. The Taxpayers’ parcel was correctly valued as residential land. [Board Record, Hearing Tape; Exhibit R, p. 89].
CONCLUSIONS OF LAW: PRINCIPLES OF LAW
33. The Board is required to “[d]ecide all questions that may arise with reference to the construction of any statute affecting the assessment, levy and collection of taxes, in accordance with the rules, regulations, orders and instructions prescribed by the department.” Wyo. Stat. Ann. § 39-11-102.1(c)(iv).
34. The Board’s Rules provide:
[T]he Petitioner shall have the burden of going forward and the ultimate burden of persuasion, which burden shall be met by a preponderance of the evidence....
Rules, Wyoming State Board of Equalization, Chapter 2 § 20.
35. The Board, in interpreting a statute, follows the same guidelines as a court:
We read the text of the statute and pay attention to its internal structure and the functional relationship between the parts and the whole. We make the determination as to meaning, that is, whether the statute’s meaning is subject to varying interpretations. If we determine that the meaning is not subject to varying interpretations, that may end the exercise, although we may resort to extrinsic aids to interpretation, such as legislative history if available and rules of construction, to confirm the determination. On the other hand, if we determine the meaning is subject to varying interpretations, we must resort to available extrinsic aids.
General Chemical v. Unemployment Ins. Comm’n, 902 P.2d 716, 718 (Wyo. 1995).
‘Determining the lawmakers’ intent is our primary focus when we interpret statutes. Initially, we make an inquiry respecting the ordinary and obvious meaning of the words employed according to their arrangement and connection. We construe together all parts of the statute in pari materia, giving effect to each word, clause, and sentence so that no part will be inoperative or superfluous. We will not construe statutes in a manner which renders any portion meaningless or produces absurd results.’ In re WJH, 2001 WY 54, ¶ 7, 24 P.3d 1147, ¶ 7 (Wyo. 2001).
TPJ v. State, 2003 WY 49, ¶ 11, 66 P.3d 710, 713 (Wyo. 2003).
36. The Board considers the omission of certain words intentional on the part of the Legislature, and we may not add omitted words. “[O]mission of words from a statute is considered to be an intentional act by the legislature, and this court will not read words into a statute when the legislature has chosen not to include them.” BP America Production Co. v. Department of Revenue, 2005 WY 60 ¶ 22, 112 P.3d 596, 607 (Wyo. 2005), quoting Merrill v. Jansma, 2004 WY 26, ¶ 29, 86 P.3d 270, 285 (Wyo. 2004). See also Parker v. Artery, 889 P.2d 520 (Wyo. 1995); Fullmer v. Wyoming Employment Security Comm’n., 858 P.2d 1122 (Wyo. 1993). The language which appears in one section of a statute but not another, will not be read into the section where it is absent. Matter of Adoption of Voss, 550 P.2d 481 (Wyo. 1976).
37. It is an elementary rule of statutory interpretation that all portions of an act must be read in pari materia, and every word, clause and sentence of it must be considered so that no part will be inoperative or superfluous. Also applicable is the oft-repeated rule it must be presumed the Legislature did not intend futile things. Hamlin v. Transcon Lines, 701 P.2d 1139, 1142 (Wyo. 1985).
38. The issue raised by the Taxpayers concerns the Assessor’s denial of agricultural classification for their land.
39. The Wyoming Constitution, article 15, § 11(b) provides in pertinent part: “[a]ll 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.”
40. The classification of land as agricultural requires fulfilment of four statutory requirements:
(x) The following shall apply to agricultural land:
(A) The department shall determine the taxable value of agricultural land and prescribe the form of the sworn statement to be used by the property owner to declare that the property meets the requirements of subparagraph (B) of this paragraph. In determining the taxable value for assessment purposes under this paragraph, the value of agricultural land shall be based on the current use of the land, and the capability of the land to produce agricultural products, including grazing and forage, based on average yields of lands of the same classification under normal conditions;
(B) Contiguous or noncontiguous 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, or if the land is leased land the lessee has derived annual gross revenues of not less than one thousand dollars ($1,000.00) 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:
(1) Experiences an intervening cause of production failure beyond its control;
(2) Causes a marketing delay for economic advantage;
(3) Participates in a bona fide conservation program, in which case proof by an affidavit showing qualification in a previous year shall suffice; or
(4) Has planted a crop that will not yield an income in the tax year.
(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.
Wyo. Stat. Ann. § 39-13-103(b)(x) (emphasis added).
41. The Department is required to confer with, advise and give necessary instructions and directions to the county assessors as to their duties, and to promulgate rules and regulations necessary for the enforcement of all tax measures. Wyo. Stat. Ann. § 39-11-102(c)(xvi) and (xix). In particular, except as 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.” Wyo. Stat. Ann. § 39-13-103(b)(ii).
42. A county assessor has a corresponding duty to annually value property within the assessor’s county, and in doing so to “[f]aithfully and diligently follow and apply the orders, procedures and formulae of the department of revenue or orders of the state board of equalization for the appraisal and assessment of all taxable property.” Wyo. Stat. Ann. § 18-3-204(a)(ix).
43. The Department Rules contain a definition of “agricultural land:”
(a) "Agricultural land" means contiguous or noncontiguous parcels of land
presently being used and employed for the primary purpose of providing gross revenue from agricultural or horticultural use or any combination thereof unless part of a platted subdivision. Agricultural land shall generally include land that is actively farmed, ranched or is used to raise timber for timber products to obtain a fair rate of return.
Rules, Wyoming Department of Revenue, Chapter 10, § 3(a).
44. The Department Rules also contain a definition of “non-agricultural lands:”
(c) "Non-agricultural lands" shall include but not be limited to lands as described in the State of Wyoming market valuation of Residential, Commercial and Industrial Lands as published by the Department of Revenue, Ad Valorem Tax Division:
(i) Lands classified within neighborhood boundaries as residential, commercial, industrial or rural, whether vacant or improved;
(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.
(iii) Residential subdivision lands developed with either predetermined floor plans and elevations or custom buildings;
(iv) Farmsteads with lands occupied by buildings which constitute the homesite including one or more acres of land used in direct connection with the homesite;
* * *
(x) Parcels of land forty (40) acres or less unless the landowner provides proof that such land should otherwise be classified as agricultural land.
(xi) Land zoned for purposes, which exclude agricultural uses.
Rules, Wyoming Department of Revenue, Chapter 10, § 3(c).
45. Administrative rules have the force and effect of law. Wyo. Dep’t of Revenue v. Union Pacific Railroad Co., 2003 WY 54, ¶ 18, 67 P.3d 1176, 1184 (Wyo. 2003); Painter v. Abels, 998 P.2d 931, 939 (Wyo. 2000).
46. With regard to appeals of property tax matters, the Wyoming Supreme Court has stated:
The Department’s valuations for state-assessed property are presumed valid, accurate, and correct. This presumption can only be overcome by credible evidence to the contrary. In the absence of evidence to the contrary, we presume that the officials charged with establishing value exercised honest judgement in accordance with the applicable rules, regulations, and other directives that have passed public scrutiny, either through legislative enactment or agency rule-making, or both.
The petitioner has the initial burden to present sufficient credible evidence to overcome the presumption, and a mere difference of opinion as to value is not sufficient. If the petitioner successfully overcomes the presumption, then the Board is required to equally weigh the evidence of all parties and measure it against the appropriate burden of proof. Once the presumption is successfully overcome, the burden of going forward shifts to the DOR to defend its valuation. The petitioner, however, by challenging the valuation, bears the ultimate burden of persuasion to prove by a preponderance of the evidence that the valuation was not derived in accordance with the required constitutional and statutory requirements for valuing state-assessed property….
Colorado Interstate Gas Company v. Wyoming Department of Revenue, 2001 WY 34, ¶¶ 9-11, 20 P.3d 528, ¶¶ 9-11 (Wyo. 2001) (citations omitted).
Airtouch Communications, Inc. v. Dep’t of Revenue, 2003 WY 114, ¶ 12, 76 P.3d 342, 348 (Wyo. 2003).
Thunder Basin Coal Co. v. Campbell County, Wyoming Assessor, 2006 WY 44, ¶ 13, 132 P.3d 801, 806 (Wyo. 2006). This presumption applies equally to an assessor’s valuation of locally assessed property. Id. at 806 n.1.
CONCLUSIONS OF LAW - APPLICATION OF PRINCIPLES OF LAW
47. We initially note that the Taxpayers have ignored the provision of the Department’s Rules placing an additional burden on the landowners who seek agricultural classification for a parcel of forty acres or less. Those landowners must provide proof that a parcel of that size should be classified agricultural. Rules, Wyoming Department of Revenue, Chapter 10, § 3(c)(x). Supra, ¶ 44. This burden applies whether or not the landowner chooses to appeal an assessor’s determination of agricultural classification.
A. Present Use for Agricultural Purpose
48. The first statutory requirement to qualify for agricultural valuation is the present use and employment of the land for an agricultural purpose. Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(I). “Agricultural purpose” is defined by statute:
"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.
Wyo. Stat. Ann. § 39-13-101(a)(viii).
49. In this case, the Taxpayers testified they produced hay and they presented a receipt for the sale of 6.5 tons of hay in the amount of $520. The Taxpayers also testified they grazed eight horses on the property and sold a mare and colt for $1,265. The use of the land by animals kept as a hobby does not, standing alone, qualify as an agricultural purpose. Rules, Wyoming Department of Revenue, Chapter 10, § 3(a)(i)(B)(II); see Brenda Arnold, Laramie County Assessor (Steel), Docket No. 96-109, June 13, 1997, 1997 WL 345863 (Wyo. St. Bd. Eq.). The production of hay for sale, however, is an agricultural purpose and supports a conclusion that the Taxpayers met the requirement of Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(I).
B. Not Part of Platted Subdivision
50. The second statutory requirement for agricultural classification is that the land “is not part of a platted subdivision.” Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(II). The Department’s Rules define “platted subdivision” as follows:
Platted subdivision” [sic] 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.
Rules, Wyoming Department of Revenue, Chapter 10, § 3(b). We note that neither of the parties addressed this Department Rule.
51. The exhibits and testimony of record and the single brief filed do not adequately address the interpretation and application of Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(II) nor the Department Rule. This lack of discussion and analysis however, based on our conclusions with regard to the other requirements for agricultural classification, does not prevent a final decision in this matter. Infra ¶¶ 53-58 .
C. Minimum Annual Gross Revenues
52. The third requirement to qualify for agricultural valuation is that the owner establish the statutory minimum gross revenues were derived from agricultural use of the property. Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(III). The evidence related to the third requirement consists of the Taxpayers’ Federal Income Tax Form 1040 Schedule F, Profit or Loss From Farming, showing a gross income of approximately $2,475 for Tax Year 2004, and two receipts, one from the sale of a mare and colt for $1,265, and one from the sale of hay for $520. It is doubtful we could accept the proceeds from sale of the mare and colt as meeting this requirement, based on the Taxpayers explanation that the mare and colt were sold because they didn’t have time to properly care for them, an explanation which implies the horses were a hobby. The amount shown on the receipt for the sale of hay exceeded the minimum income requirements set by the legislature for agricultural valuation, and could be accepted as meeting the minimum gross revenues requirement set by the legislature for agricultural valuation.
D. Use Consistent With Size, Location and Capability to Produce Primarily in an Agricultural Operation
53. The Wyoming Constitution grants favorable treatment to agricultural and grazing lands by providing they “shall be valued according to the capability of the land to produce agricultural products under normal conditions.” Wyo. Const. art. 15 § 11 (b). The statutory definition of agricultural purpose echoes this language, limiting those purposes to being “consistent with the land’s capability to produce.” Wyo. Stat. Ann. § 39-13-101 (a)(viii). Land can only qualify for agricultural classification if it meets a fourth and related statutory test of being “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….” Wyo. Stat. Ann § 39-13-103(b)(x)(B)(IV). The qualifying phrase, “consistent with the land’s capability to produce,” appears repeatedly in the Department’s Rules. E.g., Rules, Wyoming Department of Revenue, Chapter 10, §§ 3(a)(i), 3(a)(ii), 3(a)(ii)(B), 3(a)(ii)(B)(II), 3(a)(ii)(B)(III), 3(a)(ii)(B)(IV).
54. The pertinent definition of “consistent” is “in agreement or harmony; in accord; compatible.” Webster’s New World College Dictionary, 4th Edition (2001), p. 311. The fourth statutory test for agricultural classification requires use of the land in an actual agricultural operation, measured generally by the same constitutional standard providing favorable property tax treatment – the land’s capability to produce. The State Board concludes the intent of the legislature was to deny agricultural classification to lands principally employed in other uses, such as residential or those being held for future residential development, yet generating enough agricultural revenue to meet the minimum gross revenues standard of Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(III).
55. The statute expressly addresses the problem that “normal conditions” may not prevail in any given assessment year. Unusual conditions may interfere with a taxpayer’s ability to use the land consistent with its capability to produce. An agricultural producer may accordingly be excused from compliance with the fourth requirement for agricultural classification, and the minimum gross revenues requirement of Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(III), if it:
(1) Experiences an intervening cause of production failure beyond its control;
(2) Causes a marketing delay for economic advantage;
(3) Participates in a bona fide conservation program, in which case proof by affidavit showing qualification in a previous year shall suffice; or
(4) Has planted a crop that will not yield an income in the tax year.
Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(IV); see Rules, Wyoming Department of Revenue, Chapter 10, § 3(a)(ii)(A). While the Taxpayers offered an explanation for their failure to comply with the fourth requirement, being an absentee landowner using hired help, the Taxpayers failed to offer evidence of any statutorily recognized excuse from compliance with Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(IV).
56. The Assessor prepared calculations to quantify her view that the Taxpayers did not meet this requirement. She first excluded two acres from the Taxpayers’ parcel to account for their residence, as required by the Department’s Rules and consistent with her practice for other agricultural land in Fremont County. Rules, Wyoming Department of Revenue, Chapter 10, § 3(c)(iv). She then calculated a minimum production value for the remaining acres, which she rounded down to $3,500. Supra, ¶¶ 25, 26, 27, 28. This calculation is consistent with statutory requirements of the Department’s mapping and agricultural manual, which we have described in detail in other cases arising from Fremont County. E.g., Appeal of Fremont County Assessor (Dechert Property), Docket No. 2004-125, February 4, 2005, 2005 WL 301141(Wyo. St. Bd. Eq.). Finally, she compared this minimum value against the income actually reported by the Taxpayers, or $2,475. Supra, ¶ 11. Based on this comparison, she concluded the Taxpayers had not employed their land consistent with its capability to produce. Supra, ¶ 29.
57. Based on the evidence presented by the Taxpayers that $1265 of their reported revenue came from the sale of a mare and a colt, a non-agricultural use, the Taxpayers’ actual agricultural related income was at most $1210. Supra ¶ 56. We conclude this evidence is insufficient to meet the Taxpayers’ burdens of proof and persuasion as to this fourth statutory requirement.
58. The Assessor’s calculation may not be the only approach to determining whether the use of a particular property is consistent with its capability to produce, but her approach has obvious virtues. It relies on measurable criteria. The criteria tie to the Assessor’s uniformly enforced policy concerning the size of the residential portion of agricultural lands in her county. The criteria also tie to the same measures of productivity that the Department uses to determine taxable value. They also tie to revenues that a taxpayer can readily document. These objectively verifiable measures should enable a county assessor and a taxpayer to readily reach a common understanding about whether the taxpayer’s lands qualify for agricultural classification.
59. The Taxpayers referred to their restrictive covenants as a response to the Assessor’s denial of their request for agricultural classification. [Board Record, Exhibit 1, p. 91]. Specifically, they argued that the restrictive covenants now prohibit subdivision of their land. While this may be a response to the Assessor’s concern for the lands being in transition, it does not speak at all to the matter of the capability of the Taxpayers’ lands to produce. If the restrictive covenants bear in any way on the fourth statutory test, it can only be as evidence to determine whether their lands are in use “primarily in an agricultural operation.” Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(IV). The State Board doubts that an examination of the restrictive covenants supports the Taxpayers’ claim.
60. In their present form, we would be inclined to characterize the restrictive covenants as maintaining a residential character for the Taxpayers and the seven other properties of the O’Brien Subdivision, with minor accommodation for agricultural activity. For example, the covenants empower the Architectural Control Committee to determine the number and type of livestock which may be kept on any given property. [Board Record, Exhibit F, Covenants, Section V, p. 30]. On its face, this provision promotes residential use, restricts agricultural use, and unavoidably acts as a limit on the land’s capability to produce. We are skeptical that land which is truly devoted primarily to agricultural purposes can be encumbered by restrictive covenants.
61. The Taxpayers, in summary, have not fulfilled their burden of proof or ultimate burden of persuasion that the property in question qualifies for agricultural status.
IT IS THEREFORE HEREBY ORDERED the decision of the Fremont County Assessor denying the Taxpayers’ request for agricultural classification of the property at issue is affirmed.
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 the appropriate district court by filing a petition for review within 30 days of the date of this decision.
DATED this 31st day of August, 2006.
STATE BOARD OF EQUALIZATION
Alan B. Minier, Chairman
Thomas R. Satterfield, Vice-Chairman
Thomas D. Roberts, Board Member
Wendy J. Soto, Executive Secretary