BEFORE THE STATE BOARD OF EQUALIZATION
FOR THE STATE OF WYOMING
IN THE MATTER OF THE APPEAL OF )
STEVEN E. AND CORALEE OSBORN )
FROM A VALUATION DECISION OF THE ) Docket No. 2006-85
FREMONT COUNTY ASSESSOR )
2005 PROPERTY VALUATION )
FINDINGS OF FACT, CONCLUSIONS OF LAW, DECISION AND ORDER
APPEARANCES
Steven E. and Coralee Osborn (Petitioners or Taxpayers) appearing pro se.
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, (Osborn Property), Docket No. 2005-82, 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.
JURISDICTION
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 5, 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. Steven E. and Coralee Osborn own and reside on 18.36 acres at 39 O’Brien Road north of Lander, Wyoming. The property was formerly known as Lot 6 of the O’Brien Subdivision in Fremont County, Wyoming. [Board Record, Exhibit B, p. 13].
2. Eileen Oakley is the Fremont County Assessor. [Hearing Tape].
3. On April 25, 2005, the Assessor sent Taxpayers an Assessment Schedule listing the total market value of their property at $291,400. Of this total, $130,100 was for the Taxpayers’ land which is the value at issue in this proceeding. [Board Record, Exhibit A, p. 12].
4. Steven and Coralee Osborn applied for agricultural classification for their property on May 5, 2005. [Board Record, Exhibit P, pp. 72-73].
5. The Taxpayers also filed a Statement To Contest 2005 Property Tax Assessment on May 5, 2005, stating the assessment was incorrect for the following reasons:
Not part of a subdivision.
Produce grasses for forage.
Revenues over $500.00 per year.
[Board Record, Exhibit 1, pp. 89-90].
6. On May 18, 2005, the Assessor denied Taxpayers’ 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 five reasons for the denial:
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.
Activities on the land, which appear agricultural in nature, do not by themselves qualify the land for agricultural assessment.
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 equipment.
[Board Record, Exhibit P, p. 71].
7. The denial letter stated the Taxpayers could provide additional information to the Assessor’s office which may affect the classification. The Taxpayers were advised if they disagreed with the Assessor’s decision, they could file a protest with the County Board within 30 days of the assessment notice. [Board Record, Exhibit P, p. 71].
8. Mr. Osborn testified he was protesting the denial of agricultural classification for their land under Wyo. Stat. Ann. § 39-13-103. Only the classification of their land was being protested. The Taxpayers offered a description of their property as: “I have hobby horses and don’t refer to it as a ranch, just a nice place in the country.” [Board Record, Hearing Tape].
9. The Taxpayers provided a $760 receipt from the sale of hay signed by the purchaser, Dick Ellis, and the Taxpayers’ Federal Income Tax Form 1040, Schedule F, both establishing $760 gross income. [Board Record, Exhibit P, p. 74; Exhibit 1, p. 87]. The Taxpayers felt they met the letter of the law by having receipts for over $500. [Board Record, Hearing Tape]. Mr. Osborn indicated there was a second cutting of hay which was used to feed his horses through the winter. He estimated his total hay production at 25 tons. [Board Record, Hearing Tape].
10. Mr. Osborn testified the 17 tons of hay they sold were grown on seven acres. Using the Assessor’s map in Exhibit C, the Taxpayers showed that Coon Creek crossed through his property, pointing out only seven acres on the front of his property raised hay. [Board Record, Hearing Tape; Exhibit C, p. 14A]. Mr. Osborn described the remaining acres along the creek as a swamp. However, he grazed horses on approximately 10 acres of swampy land. The Taxpayers objected to being taxed the same for the swamp as for the good productive land which produced 17 tons of hay. [Board Record, Hearing Tape].
11. Mr. Osborn testified the Taxpayers invested over $5,000 in irrigation pipe during the last four years so they can irrigate the property to its full potential. [Board Record, Hearing Tape].
12. He testified his land was not part of a subdivision. In support of his position, he presented a quitclaim deed from the Taxpayers to themselves describing their property by metes and bounds. [Board Record, Exhibit 2, p. 88].
13. The Taxpayers believed they qualified for agricultural classification since their property was not part of a subdivision, was being used for forage and produced the required amount of income. [Board Record, Hearing Tape].
14. The Taxpayers were not protesting the valuation of the house or the outbuildings, only the Assessor’s refusal to grant them agricultural classification. [Board Record, Hearing Tape].
15. 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].
16. The Assessor presented a complete description of the Taxpayers’ property. [Board Record, Exhibit R, p. 82]. The market value of the property was not being disputed, only the classification.
17. The Assessor testified that to qualify for agricultural classification a property must meet the conditions of the statutes and rules which govern agricultural classification. The statutes outline those conditions and Chapter 10 of the Department’s Rules further define the conditions. [Board Record, Exhibit I, pp. 39-42].
18. The Assessor asserted that 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].
19. The Assessor must consider whether or not the land was 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].
20. The Assessor testified the parcels in the O’Brien Subdivision were required to be platted at the time they were formed, and those same parcels would be required to be platted if they were formed today. [Board Record, Hearing Tape; Exhibit K, p. 44].
21. The Assessor testified the definition of non-agricultural land under the Department’s Rules, Chapter 10, § 3(c)(ii) states: “[l]and 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” shall be non-agricultural. [Board Record, Hearing Tape; Exhibit I, p. 41; Exhibit R, p. 83].
22. 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 and the original restrictive covenants stated the purpose was to ensure the use of the property for attractive country living, residential purposes only. The restrictive covenants allowed some animals but that use was regulated by the Architectural Control Committee. [Board Record, Exhibit D, p. 15]. The new restrictive covenants changed the wording minimally and added the word agricultural to the use, but the Architectural Control Committee still controlled the use of the land. [Board Record, Hearing Tape; Exhibit F, p. 27; Exhibit R, p. 83].
23. The Assessor testified the third qualification she must consider was whether the owner of the land had derived annual gross revenue of not less than $500. The Taxpayers’ IRS Form 1040 Schedule F, Profit of Loss From Farming showed a gross income of $760. [Board Record, Exhibit 1, p. 87].
24. The fourth qualification for agricultural status was quoted by the Assessor from the statute: “[t]he 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 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].
25. The Assessor stated she applied the Department’s Rules equally and uniformly to all the properties which she assessed. Regardless of the fact that people feel they have used the property as best they can or produced as much as they can, the land had to meet the standards of a true agricultural operation. [Board Record, Hearing Tape].
26. 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. 82-86]. She first subtracted two acres from the Taxpayers’ total acreage of 18.36 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. 39-41]. She then determined a productive capacity for the remaining 16.36 acres using elements of the methods prescribed by the Department for valuation of all agricultural lands. [Board Record, Exhibit R, p. 82].
27. The Assessor used the Lander Area Soil Survey to determine the land soil type of the Taxpayers’ property. [Board Record, Exhibit R, p. 82; Exhibit J, p.43]. She overlaid ownership information on the soil survey map to do so. [Board Record, Exhibit R, p. 82; Exhibit J, p. 43; Exhibit K, p. 44].
28. 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. 44-59]. The Assessor determined: (1) the pertinent Land Resource Area, and (2) the productive class of the land. [Board Record, Exhibit R, p. 82; Exhibit M]. 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. 82; Exhibit M, p. 53]. The resulting range of production for the Taxpayer’s property was from three to four tons per acre. [Board Record, Exhibit R, p. 82; Exhibit M, p. 53]. Using the chart identified by the Assessor, those values appear for Land Resource Area 4-5, Class III. [Board Record, Exhibit M, p. 53]
29. Using the lowest production, three tons of hay per acre, and a relatively low hay price of $70 per ton, the Assessor calculated the Taxpayers’ land could produce $1,700 worth of hay. [8.1 acres times 3 tons per acre times $70 per ton by calculation]. The Assessor considered the remaining 8.26 acres to be good grazing land which should produce another $200 of income. The land should be used consistent with its capability to produce. The Assessor’s office uses two acres for farmstead for all agricultural properties in Fremont County. [Board Record, Hearing Tape].
30. The Assessor testified a portion of the production from the Taxpayers’ parcel appeared to have been used by horses kept as a hobby. Chapter 10, Section 3(ii)(B)(II), of the Department’s Rules states: “grazing on land by any animal kept as a hobby will not be considered agricultural....” When hobby animals use part of the production, marketable production falls below the land’s capability to produce, and it is not agricultural. [Board Record, Hearing Tape; Exhibit I, p. 40; Exhibit R, p. 85].
31. The Assessor reviewed the records of other small acreage parcels. She testified only five parcels between 5 and 20 acres in size had an agricultural value. There were 247 other small acreage parcels valued as residential. She stated her office was receiving more and more applications for agricultural classification which are considered at the time of application. The Assessor’s office had consistently and uniformly valued these small parcels as residential. [Board Record, Exhibit N, pp. 62-63; Exhibit O, pp. 64-70].
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. The land was originally agricultural, but was divided into parcels, and sold. The primary use of the property was residential. It was, therefore, correctly valued as residential land. [Board Record, Hearing Tape; Exhibit R, p. 86, ].
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. The Department Rules also provide that certain activities do not qualify land for agricultural valuation:
(B) The assessor shall also consider that certain activities which appear to be agricultural in nature do not by themselves qualify land for agricultural assessment. The activity, by itself, either does not raise the expectation of monetary incentive consistent with the capability of the land to produce or occurs after the agricultural product has been raised and harvested.
* * *
(II) Grazing on land by any animal kept as a hobby will not be considered agricultural unless accompanied by other agricultural activities, which would produce a monetary incentive and are consistent with the land’s capability to produce.
Rules, Wyoming Department of Revenue, Chapter 10, § 3(a)(ii)(B)(II).
46. 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).
47. 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
48. 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
49. 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).
50. In this case, the Taxpayers presented testimony and evidence which indicates they produced and sold hay in 2004. The production of hay for sale is an agricultural purpose and meets the requirement of Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(I).
51. The Taxpayers keep horses on their land. A significant portion of their hay production was feed for the horses in the winter, and a portion of the Taxpayers’s property was used for grazing their horses. This use of the land appears to be a hobby activity. The Department’s Rules provide that such use is not agricultural unless accompanied by other agricultural activities. 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.).
B. Not Part of Platted Subdivision
52. 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.
53. The exhibits and testimony of record, and the respective briefs provided by the parties, 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 ¶¶ 55-59.
C. Minimum Annual Gross Revenues
54. 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 consisted of Taxpayers’ Federal Income Tax Form 1040 Schedule F, Profit or Loss From Farming, showing a gross income of approximately $760 for Tax Year 2004, and a receipt showing income of approximately $760 from the sale of hay. This amount 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
55. The Wyoming Constitution grants favorable treatment to agricultural and grazing lands by providing that 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).
56. 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 being held for future residential development, yet generating enough agricultural revenue to meet the minimum gross revenue standards of Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(III).
57. 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 revenue 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). The Taxpayers in this case offered no evidence to support any such excuse from compliance with Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(IV).
58. The Assessor prepared a calculation 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 of $1,900 for the remaining acres, $1,700 for hay production and $200 for grazing. Supra, ¶¶ 26,27,28,29. 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., 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 approximately $760. Supra, ¶ 9. Based on this comparison, she concluded the Taxpayers had not employed their land consistent with its capability to produce. Supra, ¶ 32.
59. 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 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 a taxpayer’s lands qualify for agricultural classification.
60. The Taxpayers’ did not address the Assessor’s undisputed and objective measurement of the degree to which the Taxpayers actually used their land for agricultural purposes.
61. The Taxpayers failed to provide substantial evidence to support their assertion the primary purpose of the property was agricultural rather than residential. The Taxpayers offered a description of their property which does not support their assertion: “I have hobby horses and don’t refer to it as a ranch, just a nice place in the country.” [Board Record, Hearing Tape].
62. 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.
ORDER
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 day of September, 2006.
STATE BOARD OF EQUALIZATION
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Alan B. Minier, Chairman
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Thomas R. Satterfield, Vice-Chairman
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Thomas D. Roberts, Board Member
ATTEST:
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Wendy J. Soto, Executive Secretary