BEFORE THE STATE BOARD OF EQUALIZATION
FOR THE STATE OF WYOMING
IN THE MATTER OF THE APPEAL OF )
THE FREMONT COUNTY ASSESSOR )
FROM A DECISION OF THE FREMONT ) Docket No. 2009-111
COUNTY BOARD OF EQUALIZATION )
2009 PROPERTY VALUATION )
(Bryan & Jennifer Neely Property) )
DECISION AND ORDER
Jodi A. Darrough, Deputy Fremont County and Prosecuting Attorney, for Eileen Oakley, Fremont County Assessor (Assessor/Petitioner).
Bryan D. Neely and Jennifer S. Neely (Taxpayers) appeared pro se.
The Assessor’s Opening Brief sets out a single issue:
Was the decision of the Fremont County Board of Equalization arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, and/or unsupported by substantial evidence?
[Opening Brief of Petitioner, p. 4].
Taxpayers do not state a specific issue but generally argue:
1. Historically their property has been classified as agricultural;
2. The adjoining parcel, which is similar to Taxpayers’ property, was classified as agricultural;
3. The use of their property for grazing is not a lease but is rather the sale of grass forage in place for $500 or more;
4. Their property has been used to its productive capability based on the revenue received from the sale of grass forage in place.
[Property Owner’s Response to Opening Brief].
This is an appeal from a decision of the Fremont County Board of Equalization (County Board) reversing, other than for a two-acre farmstead, Ms. Oakley’s valuation of Taxpayers’ property as residential for 2009 tax purposes. Ms. Oakley’s Notice of Appeal was filed with the State Board of Equalization (State Board) effective August 21, 2009. Ms. Oakley and Taxpayers filed briefs as allowed by the September 16, 2009, State Board Briefing Order. Neither party requested oral argument.
The State Board, comprised of Thomas D. Roberts, Chairman, Steven D. Olmstead, Vice-Chairman, and Deborah J. Smith, Board Member, considered Ms. Oakley’s Notice of Appeal, the Opening Brief of Petitioner, the Property Owner’s Response to Opening Brief, the Reply Brief of Petitioner, the County Board Record, and the decision of the County Board.
We evaluate Ms. Oakley’s appeal of the County Board decision against our standard of review, which is whether the decision was arbitrary, capricious, unsupported by substantial evidence, and/or contrary to law. Rules, Wyoming State Board of Equalization, Chapter 3 § 9.
Ms. Oakley, in order to prevail, must establish the County Board decision is not supported by substantial evidence, and/or the County Board acted unlawfully, arbitrarily, and capriciously in reversing Ms. Oakley’s valuation decision for 2009 tax purposes.
We reverse the decision of the County Board.
PROCEEDINGS BEFORE THE COUNTY BOARD
The County Board conducted a hearing on July 21, 2009, at which Bryan D. Neely, Taxpayer, and Eileen Oakley, Fremont County Assessor, each testified and presented exhibits. The County Board entered its Decision on August 1, 2009, reversing Ms. Oakley’s 2009 fair market value for Taxpayers’ property except for Taxpayers’ two-acre homestead, and ordering her to assess Taxpayers’ property based on an agricultural classification. The decision was mailed to the parties on August 3, 2009. The County Board decision did not address Taxpayers’ challenge at the County Board level of the value of their partially completed residence. [County Board Record, Vol. I, pp. 1, 3, 5-8, 95-100; Vol II, Hearing Recording]. Taxpayers did not file an appeal with the State Board nor address in any pleadings in this appeal the failure of the County Board to address the valuation of their residence. The 2009 valuation of Taxpayers’ residence is, therefore, not addressed in this Decision and Order.
The State Board is required to “hear appeals from county boards of equalization.” Wyo. Stat. Ann. § 39-11-102.1(c). Ms. Oakley filed a timely appeal of the County Board decision with the State Board effective August 21, 2009. Rules, Wyoming State Board of Equalization, 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 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 Rules, Wyoming State Board of Equalization, Chapter 2 with Rules, Wyoming State Board of Equalization, Chapter 3. Statutory language first adopted in 1995, when the State Board and the Department 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, § 1; Wyo. Stat. Ann. § 39-1-304(a) (currently Wyo. Stat. Ann. § 39-11-102.1(c)).
The State Board standards for review of a County Board decision are, by Rule, 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 State Board will not rule on claims a County Board has acted “[c]ontrary to constitutional right, power, privilege or immunity.” Wyo. Stat. Ann. § 16-3-114(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;
Without observance of procedure required by law; or
(d) Unsupported by substantial evidence.
Rules, Wyoming State Board of Equalization, 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:
When [a person] challenges a [county board]'s findings of fact and both parties submitted evidence at the contested case hearing, we examine the entire record to determine if the [county board]'s findings are supported by substantial evidence. Colorado Interstate Gas Co. v. Wyoming Department of Revenue, 2001 WY 34, ¶ 8, 20 P.3d 528, 530 (Wyo.2001); RT Commc'ns, Inc. v. State Bd. of Equalization, 11 P.3d 915, 920 (Wyo.2000). If the [county board]'s findings of fact are supported by substantial evidence, we will not substitute our judgment for that of the [county board] and will uphold the factual findings on appeal. “Substantial evidence is more than a scintilla of evidence; it is evidence that a reasonable mind might accept in support of the conclusions of the agency.” Id.
Chevron U.S.A., Inc. v. Department of Revenue, 2007 WY 79, ¶ 9, 158 P.3d 131, 134 (Wyo. 2007).
We review the findings of ultimate fact of a county board of equalization de novo:
“When an agency’s determinations contain elements of law and fact, we do not treat them with the deference we reserve for findings of basic fact. When reviewing an ‘ultimate fact,’ we separate the factual and legal aspects of the finding to determine whether the correct rule of law has been properly applied to the facts. We do not defer to the agency’s ultimate factual finding if there is an error in either stating or applying the law.” Basin Elec. Power Co-op., Inc. v. Dep’t of Revenue, State of Wyo., 970 P.2d 841, 850-51 (Wyo. 1998)(citations omitted).
Britt v. Fremont County Assessor, 2006 WY 10, ¶ 17, 126 P.3d 117, 123 (Wyo. 2006).
We must also apply this “arbitrary and capricious” standard:
Even if sufficient evidence is found to support the agency’s decision under the substantial evidence test, this [Board] is also required to apply the arbitrary-and-capricious standard as a “safety net” to catch other agency action which might have violated the Wyoming Administrative Procedures Act. Decker v. Wyoming Medical Comm’n, 2005 WY 160, ¶ 24, 124 P.3d 686, 694 (Wyo. 2005). “Under the umbrella of arbitrary and capricious actions would fall potential mistakes such as inconsistent or incomplete findings of fact or any violation of due process.” Id. (quoting Padilla v. State ex rel. Wyoming Workers’ Safety and Comp. Div., 2004 WY 10, ¶ 6, 84 P.3d 960, 962 (Wyo. 2004)).
State ex rel. Wyoming Workers’ Safety and Comp. Div. v. Madeley, 2006 WY 63, ¶ 8, 134 P.3d 281, 284 (Wyo. 2006).
FACTS PRESENTED TO THE COUNTY BOARD
1. Taxpayers own and reside on 19.89 acres at 2286 Baldwin Creek Road, east of Lander, in Fremont County, Wyoming. Taxpayers also own a second vacant 9.13 acre parcel on Baldwin Creek Road which Ms. Oakley valued as being contiguous to the parcel on which Taxpayers reside. [County Board Record, Vol. I, Exhibit A, p. 33; Exhibit B, p. 42; Exhibit C, p. 43; Vol. II, Hearing Recording].
2. Taxpayers submitted an Application for Agricultural Classification to Ms. Oakley on May 14, 2009. They certified: 1) The land is presently being used and employed for the production of timber products or grass forage; 2) The land is not part of a platted subdivision; 3) The land is leased land [to Ted Seely, 2288 Baldwin Creek Road] and the lessee has derived annual gross revenues of not less than one thousand dollars from the marketing of agricultural products; and 4) The land has been used consistent with the land’s size, location and capability to produce as an agricultural operation as defined by Department Rules and Mapping & Agricultural Manual. [County Board Record, Vol. I, Exhibit I, pp. 74-75].
3. Ms. Oakley sent Taxpayers an Amended Notice of Assessment dated May 15, 2009, listing the total market value of their property and improvements at 2286 Baldwin Creek Road at $520,073. The land was classified as residential and valued at $233,841. The remainder of the assessment, $286,232, was the value assigned for the residential improvements located on that property. Ms. Oakley sent a separate Notice of Assessment dated April 15, 2009, for the vacant parcel indicating a value as residential land of $20,999. [County Board Record, Vol. I, Exhibit B, p. 42; Exhibit C, p. 43; Vol. II, Hearing Recording].
4. Taxpayers filed a Statement To Contest 2009 Property Tax Assessment, with attachments, on May 14, 2009, stating, in summary, the assessment of their properties was incorrect for the following reasons:
(1) The land is presently being used for an agricultural purpose, i.e., grass forage.
(2) The land is not part of a platted subdivision.
(3) Land has been leased to Ted Seely in 2009, and proof of not less than $1000 in gross revenue will be provided.
(4) The land has been used consistent with it’s size, location, and capability. The irrigation delivery system has been improved which improves the capacity of the pasture. Rent exceeded $500 in both 2007 and 2008.
[County Board Record, Vol. I, pp. 5-31].
5. Bryan D. Neely testified at the July 21, 2009, County Board hearing for both himself and his wife as the owners of the property at issue. [County Board Record, Vol. II, Hearing Recording].
6. Mr. Neely stated the property in question had, in previous years, received agricultural classification until a residential structure, which utilized only one acre, was placed on the property. He asserted the simple fact a residence had been constructed on the property, which was the only development thereon, should not disqualify all 29 acres from agricultural classification. [County Board Record, Vol. II, Hearing Recording].
7. Mr. Neely indicated the 29 acres at issue has an adjudicated water right which was used to irrigate a portion of the property on which he also actively attempted to prevent weed infestation. He also indicated the property was not located within the boundaries of a platted subdivision. [County Board Record, Vol. II, Hearing Recording].
8. Mr. Neely submitted, as an exhibit, a “Pasture Rent Agreement” between himself and Ted Seely for 30 acres +/- of sagebrush and creek bottom. The agreement stated approximately 10 acres were irrigated. The term of the agreement commenced May 15, 2009. Mr. Neely asserted Mr. Seely has other property classified as agricultural in Fremont County which must mean he has gross revenue from the marketing of agricultural products greater than the statutorily required $1000. [County Board Record, Exhibit 4, Vol. I, p. 13; Vol. II, Hearing Recording].
9. Mr. Neely also asserted that in previous years, including 2008, he had an agreement with James R. Allen to “harvest grass forage” from Mr. Neely’s property by grazing horses. He argued this agreement, which was apparently oral, was not a “lease” but rather a sale of grass forage to Mr. Allen which Mr. Allen harvested by grazing horses. The check from Mr. Allen, in the sum of $588, submitted as an exhibit by Mr. Neely, was dated October 31, 2008. The check was drawn an account in the name of “Allen’s Diamond Four Ranch, Inc., Wilderness Outfitting & Guiding.” The check also stated it was “For Pasture Lease 2008.” [County Board Record, Exhibit 6, Vol. I, p. 15; Vol. II, Hearing Recording].
10. Mr. Neely asserted the $588 payment he received from Mr. Allen in 2008 should be considered “net” income since the harvesting of the grass forage was done by horses grazing. He argued that if his expenses were added to this “net” income, his gross income would exceed the amount calculated by Ms. Oakley to determine whether the property was being employed consistent with its capability to produce. Mr. Neely did not provide any testimony or exhibits which itemized his alleged expenses. [County Board Record, Vol. II, Hearing Recording].
11. Eileen Oakley testified she was the Fremont County Assessor, and had been certified as a property tax appraiser by the State of Wyoming. [County Board Record, Vol. II, Hearing Recording].
12. Ms. Oakley testified that in order to qualify for agricultural classification, a property must meet all four of the conditions set out in the relevant Wyoming statute as those conditions are further defined by Chapter 10 of the Department Rules. She asserted, with regard to Taxpayers’ property, only one of the four conditions had been met, i.e. Taxpayers’ property was not included within a platted subdivision. [County Board Record, Vol. I, Exhibit A, pp. 34-41; Exhibits G & H; Vol. II, Hearing Recording].
13. Ms. Oakley testified to her assertion Taxpayers’ property was not being used or employed for an agricultural purpose. She asserted that its primary purpose was not agricultural, as required by Chapter 10 of the Department Rules, but rather was residential. [County Board Record, Vol. I, Exhibit A, pp. 35-36; Vol. II, Hearing Recording].
14. Ms. Oakley further testified to her opinion Taxpayers’ did not fulfill the requirement of at least $500 in gross revenue from marketing agricultural products if the property was not leased in 2008, or, in the alternative, did not fulfill their burden of proving the lessee in 2008 had not less than $1000 in gross revenue from marketing agricultural products. It was her opinion the pasturing of horses by an outfitter did not qualify as marketing of agricultural products, and there was no indication Mr. Allen, if he was a lessee in 2008, had the required agricultural marketing gross revenue of not less than $1000. [County Board Record, Vol. I, Exhibit A, pp. 36-37; Vol. II, Hearing Recording].
15. Ms. Oakley discussed as well the fourth qualification for agricultural status, that “[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. [County Board Record, Vol. I, Exhibit A, pp. 38-39; Vol. II, Hearing Recording].
16. Ms. Oakley prepared a quantitative analysis to determine whether Taxpayers had used their land consistent with its capability to produce. Ms. Oakley first subtracted two acres from the combined total acreage of 29.02 acres for both parcels to account for a residential farmstead as required by the Department Rules. She then determined a productive capability for the remaining 27.02 acres using elements of the methods prescribed by the Department for valuation of all agricultural lands. She calculated the productive capability of the remaining acreage using two different productive capacities for the irrigated portion of that acreage in order to account for differences in the ability to irrigate. [County Board Record, Vol. I, Exhibit A, pp. 38-39; Vol. II, Hearing Recording].
17. Ms. Oakley used the methods prescribed by the Department to determine the productive capability of Taxpayers’ land. She used a Soil Survey to determine the land soil type of the property. She then determined the productive value of the soil type using the 2009 Agricultural Land Valuation Study authored by the Department. [County Board Record, Vol. I, Exhibit A. pp. 38-39; Exhibits J, K, & L; Vol. II, Hearing Recording].
18. Using the described method, Ms. Oakley determined, based on the soil class for Taxpayers’ land, its productive capability should have produced income between $1800 and $2599. [County Board Record, Vol. I, Exhibit A, pp. 38-39; Vol. II, Hearing Recording].
19. Since the land should be used consistent with its capability to produce but had generated only $588 of income in 2008, Ms. Oakley determined it did not meet the requirement of producing agricultural products consistent with its size, location and capability to produce. [County Board Record, Vol. I, Exhibit A, p. 14; Vol. II, Hearing Recording].
20. In conclusion, Ms. Oakley asserted that while Taxpayers’ parcels had activities which appear to be agricultural, all four of the statutory requirements for agricultural classification had not been met. Therefore, in Ms. Oakley’s opinion, Taxpayers’ land did not qualify for agricultural assessment. Its primary use was residential and, therefore, should be valued as residential. [County Board Record, Vol. I, Exhibit A, p. 41; Vol. II, Hearing Recording].
DISCUSSION OF ISSUES AND APPLICABLE LAW
General Legal Principles
21. 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.” (Emphasis added).
22. The Wyoming Constitution, article 15 § 11(d), requires “[a]ll taxation shall be equal and uniform within each class of property. The legislature shall prescribe such regulations as shall secure a just valuation for taxation of all property, real and personal.”
23. 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, except for a parcel of thirty-five (35) acres or more which otherwise qualifies as agricultural land;
(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).
24. 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).
25. 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).
26. 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).
27. The Department Rules also contain a definition of “non-agricultural lands” which provides in part:
(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:
* * *
(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.
Rules, Wyoming Department of Revenue, Chapter 10 § 3(c)(iv) & (x).
28. The Department Rules also provide 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.
Rules, Wyoming Department of Revenue, Chapter 10 § 3(a)(ii)(B).
29. 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).
30. Our evaluation of this appeal turns, at least in part, on the question of whether there is substantial evidence in the record which reasonably supports the County Board decision. In determining whether the required substantial evidence is present, the State Board will not substitute its judgement for findings reasonably supported by evidence in the County Board record. Laramie County Board of Equalization v. State Board of Equalization, 915 P.2d 1184, 1188-1189 (Wyo. 1996); Holly Sugar Corp. v. Wyoming State Board of Equalization, 839 P.2d 959 (Wyo. 1992); Sage Club, Inc. v. Employment Sec. Comm’n., 601 P.2d 1306, 1310 (Wyo. 1979). While substantial evidence may be less than the weight of the evidence, it cannot be clearly contrary to the overwhelming weight of the evidence. The Wyoming Supreme Court has stated “[s]ubstantial evidence is a term of art best described as relevant evidence that a reasonable mind can accept as adequate support for an agency’s conclusion.” Sidwell v. State Workers’ Compensation Div., 977 P.2d 60, 63 (Wyo. 1999).
The Presumption in Favor of an Assessor’s Value
31. An assessor’s valuation is presumed valid, accurate, and correct. This presumption survives until overturned by credible evidence. Britt v. Fremont County Assessor, 2006 WY 10, ¶ 23, 126 P.3d 117, 125 (Wyo. 2006); Thunder Basin Coal Company v. Campbell County, Wyoming Assessor, 2006 WY 44, ¶ 13, 132 P.3d 801, 806 (Wyo. 2006); Teton Valley Ranch v. State Board of Equalization, 735 P.2d 107, 113 (Wyo. 1987). A mere difference of opinion as to value is not sufficient to overcome the presumption. J. Ray McDermott & Co. v. Hudson, 370 P.2d 364, 370 (Wyo. 1962); Thunder Basin Coal Company v. Campbell County, Wyoming Assessor, 2006 WY 44, ¶¶ 13, 48, 132 P.3d 801, 806, 816 (Wyo. 2006). The presumption is especially valid where the Assessor valued the property according to the Department’s Rules and Regulations. Rules, Wyoming Department of Revenue, Chapter 9 & 10. “The burden is on the taxpayer to establish any overevaluation.” Hillard v. Big Horn Coal Co., 549 P.2d 293, 294 (Wyo. 1976).
32. The Wyoming Supreme Court has described the burden of proof for a taxpayer challenging a county assessor’s valuation:
A strong presumption favors the Assessor’s valuation. “In the absence of evidence to the contrary, we presume that the officials charged with establishing value exercised honest judgment 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.” Amoco Production Co. v. Dept. of Revenue, 2004 WY 89, ¶ 7, 94 P.3d 430, 435 (Wyo. 2004). The Britts [i.e., the protesting taxpayers] had the initial burden of presenting evidence sufficient to overcome the presumption. Id., ¶ 8. If the Britts successfully overcame the presumption, then the county board was “required to equally weigh the evidence of all parties and measure it against the appropriate burden of proof.” CIG v. Wyoming Dept. of Revenue, 2001 WY 34, ¶ 10, 20 P.3d 528, 531 (Wyo. 2001). The burden of going forward would then have shifted to the Assessor to defend her valuation. Id. Above all, the Britts bore “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 . . . property.” Id.
Britt, supra, 2006 WY 10, ¶ 23, 126 P.3d at 125.
33. Ms. Oakley contends the County Board erred in reversing her decision to deny agricultural classification to Taxpayers’ land. She argues the land does not meet three of the four statutory requirements for agricultural classification. Her arguments specifically address whether Taxpayers’ use of their land comports with the requirements of subsections (B)(I), (B)(III), and (B)(IV) of Wyo. Stat. Ann. § 39-13-103(b)(x). She further argues the County Board findings were an arbitrary and capricious act not in accordance with law and not supported by substantial evidence.
34. As the Wyoming Supreme Court pointed out in Britt, supra, a protesting taxpayer has the initial burden of presenting sufficient credible evidence to overcome the presumption in favor of the valuation established by the assessor. If a taxpayer meets this initial burden, the burden of going forward shifts to the assessor to defend their valuation. The ultimate burden of proof - burden of persuasion - is, however, always borne by the protesting taxpayer. We therefore consider the County Board decision in light of this authority. Supra, ¶¶ 31,32.
35. It is also important to remember in challenges to an assessor’s denial of agricultural classification the Department Rules define “non-agricultural lands” to include parcels of less than 40 acres, and place the burden on the landowner to prove otherwise. Supra, ¶ 27.
36. The parties agreed at the County Board hearing that Taxpayers’ land met one of the four statutory requirements for agricultural classification, i.e. Taxpayers’ land was not part of a platted subdivision. Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(II), Supra, ¶¶ 7, 12, 23. [County Board Record, Vol. I, Decision of the Fremont County Board of Equalization, p. 98].
37. The focus of Ms. Oakley’s complaints and our analysis, therefore, is on the first, third, and fourth requirements of Wyo. Stat. Ann. section 39-13-103(b)(x)(B). Supra, ¶ 23.
A. Present Use for Agricultural Purpose
38. 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), Supra, ¶ 23.
39. “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).
40. While we may be inclined to agree with Ms. Oakley that Taxpayers’ minimal “grass forage” sale raises questions concerning Taxpayers’ agricultural use of their land, the uncontradicted evidence of weed control and irrigation, and the subsequent uses of the land for pasture, constitutes substantial evidence from which the County Board could reasonably have concluded Taxpayers met the requirement of Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(I).
B. Gross Revenue Requirement
41. The third statutory requirement for classification as agricultural land mandates, if the land is not leased, the owner derive gross revenues of at least $500 from the marketing of agricultural products. If the land in question is leased, the lessee must derive at least $1000 from the marketing of agricultural products. Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(III). Supra, ¶ 23.
42. Taxpayers’ argue they have met this statutory requirement based on two assertions. The first assertion points to the fact the property at issue was leased in 2009 to a neighbor, Ted Seely, who has other property in Fremont County classified as agricultural, thus he must have agricultural products income greater than $1000. Supra, ¶ 8.
43. The fact Taxpayers’ property was leased in 2009, the year at issue, is not relevant to its classification status for that tax year. An assessor is required, by statute, to determine the value, and thereby the classification, of all property as of January 1st of each year. Wyo. Stat. Ann. § 39-13-103(b)(i)(A). An assessor’s agricultural land classification decision for each year must therefore be based on whether or not the four statutory requirements were fulfilled during the prior year. The status of the property for the current year is thus only relevant for consideration in the upcoming year.
44. Taxpayers’ second assertion in support of their contention the gross revenue requirement has been met rests on their argument they sold “grass forage” to Jim Allen in 2008 for $588 which Mr. Allen “harvested” by grazing horses. Ms. Oakley asserted the income received by Taxpayers from Mr. Allen did not fulfill the $500 requirement because, according to Ms. Oakley, Mr. Allen was an outfitter, thus grazing his horses on Taxpayers’ property was a commercial activity which did not result in agricultural product income. [Opening Brief of Petitioner, p. 7].
45. Notwithstanding the argument by Ms. Oakley the grazing of horses by an outfitter did not result in agricultural income, it is apparent from the evidence presented by Taxpayers at the County Board hearing Mr. Allen considered his use of Taxpayers’ property in 2008 as a “pasture lease.” This conclusion is supported by the designation he wrote on his October 21, 2008, check for $588. A conclusion Taxpayers’ leased the property at issue to Mr. Allen in 2008 appears to be a more reasonable conclusion, based on the evidence presented at the County Board hearing, than a sale of “grass forage” harvested by grazing horses. Such an assertion, while an intriguing argument, seems designed to avoid the requirement a person requesting agricultural classification for property based on the land being leased must provide evidence the lessee had the requisite amount, $1000, of gross revenues from the marketing of agricultural products. Taxpayers provided no evidence to support a conclusion Mr. Allen, as a lessee, derived the required gross revenues.
46. Even if it is presumed, for purposes of argument, the $588 of revenue received by Taxpayers somehow fulfills the statutory gross revenue requirement, such an amount does not reflect use of Taxpayers’ land consistent with its capability to produce in primarily an agricultural operation. See, Infra, ¶¶ 47, 49, 50, 51, 54, 55, 56.
C. Use Consistent With Size, Location and Capability to Produce Primarily in an Agricultural Operation
47. The fourth requirement of Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(IV) is that “[t]he 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….” Supra, ¶ 23.
48. Ms. Oakley argues Taxpayers failed to establish this fourth requirement based on her calculation Taxpayers’ property had the ability to produce gross agricultural income of $2599.76, and Taxpayers failed to reach that threshold. [Opening Brief of Petitioner, pp. 7-8].
49. 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 the 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).
50. 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).
51. Ms. Oakley prepared a calculation to quantify her view Taxpayers did not use their land consistent with its capability to produce. She first excluded two acres from Taxpayers’ property to account for their residence, as required by the Department 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 production value of a minimum of $1800, and a maximum of $2599, for the remaining 27.02 acres. Supra, ¶¶ 16, 17, 18. This calculation is consistent with statutory requirements and the Department mapping and agricultural manual, which we 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 income against the $588 income actually reported by the Taxpayers. Based on this comparison, she concluded Taxpayers had not employed their land consistent with its capability to produce. Supra, ¶ 19.
52. Taxpayers argued in response to Ms. Oakley’s calculations that the $588 which they received from Mr. Allen was somehow “net” revenue, not gross. Mr. Neely asserted if his expenses were added to the “net” revenue his gross revenue would exceed the gross revenue amounts calculated by Ms. Oakley. This argument was based, at least in part, on Taxpayers’ assertion the harvesting of grass forage was done by horses grazing, and that absent such grazing, they would have had additional expenses which would have to be recovered by charging more for the mechanically-harvested grass forage. The result, according to Mr. Neely, would be gross revenue which would exceed what Ms. Oakley calculated as the capability of Taxpayers’ land to produce. [Property Owner’s Response to Opening Brief, p. 3].
53. Taxpayers, however, provided no testimony or exhibits with regard to any of the alleged avoided expenses to support their net versus gross revenue assertion. Without such evidence, the County Board record simply reflects that Taxpayers received $588 as agricultural gross revenue in 2008. Such an amount was not sufficient to reflect their property was being used to its capability to produce. Supra, ¶ 10.
54. The classification and valuation of land as agricultural contemplates the sale of agricultural products. Wyo. Const., art. 15, § 11(b), supra, ¶ 21 (capability of the land to produce agricultural products); Wyo. Stat. Ann. §§ 39-13-103(b)(x)(A), supra, ¶ 23 (capability of the land to produce agricultural products); 39-13-103(b)(x)(B)(III), supra, ¶ 23 (derived annual gross revenues…from the marketing of agricultural products); 39-13-103(b)(x)(B)(IV), supra, ¶ 23 (production failure…marketing delay…will not yield income in the tax year…).
55. We have carefully reviewed the County Board recitation of Taxpayers’ arguments and the underlying facts presented at the County Board hearing. The County Board Decision acknowledged Ms. Oakley’s argument that Taxpayers’ production was inconsistent with the land’s size, location and capability to produce. [County Board Record, p. 98]. The County Board likewise acknowledged its own review of Ms. Oakley’s Exhibit A, which included her calculations. [County Board Record, p. 98]. The County Board decision nonetheless failed to address in any meaningful way Ms. Oakley’s undisputed and objective measurement of the degree to which Taxpayers actually used their land for agricultural purposes, and found generally that Taxpayers had met their burdens. [County Board Record, p. 99].
56. We know the County Board both understood the fourth statutory requirement, and had accepted Ms. Oakley’s objective measure of a taxpayer’s agricultural land use in other cases. We have affirmed a decision by the Fremont County Board in large measure because the County Board accepted Ms. Oakley’s objective measure of the productive capability of a taxpayer’s land and concluded the taxpayer did not meet this fourth statutory requirement. Tory & Meredith Taylor, Docket No. 2007-70, ¶¶ 45, 61-69, March, 12, 2008, 2008 WL 755827 (Wyo. Stat. Bd. Eq.). We find nothing factual or legal in the County Board decision or the record to support the County Board’s failure to accept in this case Ms. Oakley’s objective measure of the degree to which Taxpayers’ land was used consistent with its capability to produce.
57. The Wyoming Supreme Court has noted that “a strong presumption favors an assessor's valuation,” and the ultimate burden of persuasion to prove the valuation determined by Ms. Oakley was not derived pursuant to constitutional and statutory requirements must be shouldered by the taxpayer challenging the value. Britt v. Fremont County Assessor, 2006 WY 10, ¶ 23, 126 P.3d 117, 125 (Wyo. 2006). Taxpayers did not fulfill their ultimate burden in this case. Supra, ¶ 32. Taxpayers presented no evidence challenging Ms. Oakley's overall methodology used to determine whether the production capability requirement of agricultural land classification had been met.
58. We conclude Ms. Oakley established the Taxpayers did not use their land consistent with its capability to produce. The County Board decision to the contrary is not supported by substantial evidence. The County Board failed to meaningfully address the evidence presented by Ms. Oakley. In light of the absence of evidence in the record from which the County Board could conclude Taxpayers established they used their land consistent with the capability of their land to produce, the County Board failed to properly invoke and apply the statutory requirement of Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(IV). For these reasons we reverse the County Board’s decision.
59. There is some indication in the County Board decision the fact Taxpayers’ property had previously been classified as agricultural was a factor in the decision to overturn Ms. Oakley’s determination and classify the property as agricultural in 2009. [County Board Record, Vol. I, p. 99]. It is important to keep in mind an assessor must, as required by statute, annually list, value and assess all property in the county as of January 1st of each year. Wyo. Stat. Ann. § 39-13-103(b)(i)(A). What the classification of property might have been in prior years is thus not relevant to the determination of value or classification for a current year.
IT IS THEREFORE HEREBY ORDERED the decision of Fremont County Board of Equalization reversing Ms. Oakley’s decision to deny Taxpayers agricultural classification is reversed. The case is remanded to the County Board to reinstate the Ms. Oakley’s residential classification of the Taxpayers’ lands.
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 11th day of May, 2010.
STATE BOARD OF EQUALIZATION
Thomas D. Roberts, Chairman
Steven D. Olmstead, Vice-Chairman
Deborah J. Smith, Board Member
Wendy J. Soto, Executive Secretary