Opinion
C.A. No. 99A-09-007 CG.
Date Submitted: January 11, 2000
Date Decided: February 29, 2000
On Appeal from the New Castle County Board of Assessment Review. REVERSED and MODIFIED.
William J. Martin, Prickett, Jones Elliott, Attorney for Appellant.
John E. Tracey, Assistant County Attorney, New Castle, Delaware, Attorney for Appellees.
MEMORANDUM OPINION
This is an appeal by the property owner from a decision of the New Castle County Board of Assessment Review restoring farmland assessment status to only a portion of the property.
Appellant, Lisa D. Moseley, owns tax parcel 07-017.00-006, at issue in this appeal (hereinafter referred to as "the Property.") The Property consists of approximately 180 acres located in Greenville. Delaware. For many years prior to 1998, the Property was assessed and taxed pursuant to the provisions of the State Farmland Assessment Act, 9 Del. C. § 8328 — 8337. On January 15, 1997, Moseley entered into a 99-year land lease with BMR Partners, L.L.C. Pursuant to the terms of the lease, BMR is developing the Fieldstone Golf Course on the leased Property.
On June 11, 1998, New Castle County approved a site plan for Fieldstone Golf Course. As a result, the County removed the Property from the Farmland Assessment Program and levied rollback taxes in the amount of $196,215.35 against the Property. The County has also increased the assessed value of the Property from $1,855,600 to $3,411,700.
On January 4, 1999, Moseley appealed the removal of the Property from the Farmland Assessment Program and the validity of the rollback tax levy to the Board of Assessment Review. On August 12, 1999, the Board held a hearing to consider Moseley's appeal and issued its decision. The Board moved to restore farmland assessment to 23.1 acres of the Property, contingent upon Moseley's presentation of a report from the State Forester that the acreage constituted a forest area. Moseley subsequently appealed the Board's decision to this Court pursuant to 9 Del. C. § 8312(c). Moseley asks that the Court modify the Board's decision to reinstate farmland assessment status to 52 acres of the Property so that rollback taxes will be applied to only 128 acres.
Moseley also appealed the increase in the assessed value of the Property to the Board in a separate appeal. Moseley's appeal of that decision is considered in a separate decision by the Court. See Moseley v. Board of Assessment Review, Del. Super., C.A. No. 99A-09-008, Goldstein, J., (February 29, 2000), Mem. Op.
At the Board hearing, William J. Martin, Esq. represented Moseley and also appeared as a witness. Martin testified that Moseley and her family have owned the Property since the late 1920's and that the Property essentially had been undeveloped until 1998, when Moseley accepted a proposal to lease the Property to BMR for its exclusive use as a golf course and club house.
The Court acknowledges that the line between Martin's testimony as a witness and his arguments as legal counsel are blurred. However, the Court notes that the evidentiary standards for Board hearings are somewhat less than before a court.
Martin stated that, of the entire acreage encompassed by the Property, only 128 acres are "actively" used in the golf course project. The remaining land, approximately 52 acres, according to Martin, is largely undisturbed and therefore still subject to farmland assessment, either as agricultural use land from sale of timber or as forest use land. Martin testified that a relatively flat, 20-acre meadow will be used by Moseley to grow saplings and small trees that will probably be sold to the golf course to replace trees that are lost. Martin stated that this would be a five-to ten-year plan. In addition, Martin testified that Moseley plans to remove trees that fall down or are damaged or diseased in other wooded areas and sell them as firewood, although Martin stated that Moseley does not plan to harvest living trees. Martin testified that the income from the firewood sales will exceed $1,000 over the next few years.
Moseley breaks down the "active use" by the golf course as follows:
Fairways: 31.09 acres
Primary rough: 26.00 acres (seeded)
23.00 acres (sod)
Secondary rough: 31.00 acres (seeded)
2.20 acres (sod)
Tertiary rough: 6.60 acres (seeded)
Greens: 3.01 acres
Tee boxes: 3.90 acres
Bunkers 1.60 acres _____________ TOTAL: 128.40 acres
Steven J. Hopkins, an assessor, testified on behalf of New Castle County. Hopkins testified that he had visited the Property on three separate occasions within the three months prior to the hearing. Hopkins stated that during his visits he looked for farming activity, specifically for open fields, hay, or grain and that he saw no signs of such activity. Hopkins testified that parts of the Property were heavily wooded, but stressed that whether portions of the Property constituted forestland or whether there was timber present in harvestable amounts was a question for the State Forester. However, Hopkins testified that he was in the Forestry Department for six years and had "a little knowledge" of wood and trees. Hopkins opined that some of the trees on the Property were not very good harvestable timber.
At the conclusion of the hearing, the Board voted to restore farmland assessment to 23.1 acres of the Property that are relatively contiguous as forest use land, contingent upon Moseley's presentation to the Board of a report from the State Forester that the acreage did indeed constitute a forest area.
Before this Court, Moseley argues that the County failed to satisfy its burden to establish that the Property no longer qualifies for the Farmland Assessment Program and that Moseley presented competent evidence that portions of the Property are eligible for such status. In addition, Moseley argues that the Board acted arbitrarily and unreasonably by determining that only 23.1 acres of the Property are eligible for farmland assessment. Moseley argues that 52 acres qualify for the program either as forest use or agricultural use land.
In considering an appeal from the Board, the Court must accept the Board's decision as prima facie correct. It is the appellant's burden to show that the Board acted contrary to law, fraudulently, arbitrarily, or capriciously. 9 Del. C. § 8312 (c); Tatten Partners, L.P. v. Board of Assessment Review, Del. Super., 642 A.2d 1251, 1261 (1993), aff'd., Del.Supr., 647 A.2d 382 (1994). The Court may affirm, reverse or modify the decision of the Board. Id.
The Farmland Assessment Program is set forth in 9 Del. C. § 8328 through 8337. Its purpose, as set forth in section 8328, is to "[e]ncourage the preservation of farmland . . ., to conserve the State's natural resources and to provide for the welfare and happiness of the inhabitants of the State" and to "[p]revent the forced conversion of farm land and forestland to more intensive uses as a result of economic pressures caused by the assessment thereof for purposes of property taxation at values incompatible with their preservation as such farm land and forest land." In other words, property is given farmland status and a break from higher property taxes so that the property owner will not be forced to convert the land's use to "more intensive uses" such as subdivision or commercial development in order to come up with the money to pay property taxes. Although in Moseley's initial appeal documents filed with the Board, she seemingly argues that the Property's use as a golf course complies with the requirements of this program, Martin abandoned the argument at the Board hearing and does not raise it in this appeal.
Specifically, the Board questioned Martin, "You're not appealing the assessment of the entire 185 [acres]?"
Martin responded, "Well, I would say to you that I don't think that if I said I was appealing the whole 185 — and I suppose I could make the argument, and I think our appeal documents have said it — I think the spirit of the rollback tax should not apply to the full 185 acres. But I need to make my best possible argument for you all today." P. 15.16.
In order to qualify for farmland assessment valuation under 9 Del. C. § 8329, land must be "actively devoted to agricultural, horticultural or forest use." Agricultural use, horticultural use, and forest use are defined in § 8330, § 8331, and § 8332, respectively. Under § 8330, land is deemed to be in agricultural use when "devoted to the production for sale of plants and animals useful to man, including but not limited to . . . trees and forest products. . . ." Under § 8832, land is deemed to be in forest use "when devoted to tree growth in such quantity and so spaced and maintained as to constitute in the opinion of the State Forester a forest area."
The criteria for farmland use is set forth in 9 Del. C. § 8333. Pursuant to § 8333(i), which Moseley argues is applicable, land shall be deemed to be actively devoted to agricultural, horticultural or forestry use where not less than ten acres are in such use and gross sales for agricultural horticultural or forestry products produced on the land have averaged at least $1,000 per year for the last two years preceding the tax appeal or there is clear evidence of anticipated yearly gross sales of at least $1,000 within two years.
Pursuant to 9 Del. C. § 8334(d)(3), whenever land in agricultural use is applied to a non-agriculture use, the County may impose roll-back taxes upon the property. However, when only a portion of a larger piece of land is applied to non-agricultural use, the roll-back tax is to be applied only to that part of the land in non-agricultural use and the rest of the land remains eligible for valuation under the Farmland Assessment Program. 9 Del. C. § 8334(d)(4). Section 8334(d)(4) places the burden upon the County to show that land is ineligible for farmland assessment.
Specifically, § 8335(d)(4) provides:
Notwithstanding anything in this chapter to the contrary, whenever land in agricultural use is applied to a use other than agriculture, and such land is but a portion of a larger tract of land, the remainder of which continues in agricultural use, roll-back taxes as provided herein shall be payable only with respect to the portion of the land which is applied to a use other than agricultural, and the remainder of the land which continues in agricultural use shall remain eligible for valuation under §§ 8330-83 37 of this title, provided the criteria for land use set forth under § 8333 continue to be satisfied. The owner of the land which continues in agricultural use shall be required to apply for eligibility for valuation, and the burden for establishing ineligibility shall rest with the assessing authority.
Initially, Moseley argues that the County failed to satisfy its burden to establish that the entire Property no longer qualifies for the Farmland Assessment Program because it failed to present competent evidence of ineligibility at the Board hearing. According to Moseley, the testimony of Steven Hopkins that he did not see any evidence of farming activity on any of his visits to the Property is insufficient because Hopkins failed to look for evidence of forest use or the removal of timber. Also, Mr. Hopkins was unable to state whether portions of the Property would meet the requirements of the forestry program. Therefore, Moseley argues that Hopkins' testimony does not constitute competent evidence of ineligibility for farmland assessment because Hopkins failed to consider whether the Property qualifies as either forest use or agricultural use land.
In response, Appellees argue that the County met its initial burden to show that the Property is ineligible for the Farmland Assessment Program. The County, upon becoming aware of a change in use on the Property, responded to the Property to ascertain its current use. On three trips to the Property, the assessor saw no evidence on the Property consistent with the farmland assessment program. As a result, Appellees argue that the County's initial determination that the Property no longer qualified as farmland was correct.
The Court finds that the County met its initial burden to show that the Property no longer qualifies for farmland assessment, based upon its receipt of the site plan for the golf course located on the Property and visits to the site by Steven Hopkins. Clearly, the majority of the Property, 128 acres out of approximately 180, or roughly 68 percent, was in "active" use by the golf course at the time of Hopkins' visits. As a result. the burden shifted to the taxpayer to rebut the presumption that the Property is no longer eligible for farmland assessment and to prove that any portion of the Property is so entitled.
Moseley next argues that she presented sufficient competent evidence to the Board to overcome the presumption that the entire Property was no longer entitled to farmland status. Specifically, Moseley argues that she presented competent evidence that only 128 acres of the total 180-acre Property are actively in use as a golf course. Moseley argues that she also presented competent evidence that the remainder of "undisturbed" land, roughly 52 acres, will remain in agricultural or forest use. Moseley states that she presented testimony by Martin and photographs showing that she intends to grow saplings and small trees for eventual sale. In addition, Moseley has shown that, until the trees are ready for sale in five to ten years, she will sell timber and firewood off the Property.
In addition, Moseley argues that her position is supported by a letter from the State Forester dated September 29, 1999. Apparently, Moseley obtained the letter in response to the Board's requirement that Moseley present a report from the State Forester confirming that 23.1 acres of the Property constitute a forest area. However, the Court can find no evidence that the September 29, 1999 letter, attached to Moseley's appeal, was ever submitted to the Board. Though Moseley concedes that he letter is not part of the record below, Moseley argues that the Court may consider the letter pursuant to 9 Del. C. § 8312(c), which provides that the Court may permit the parties to present "any new or different evidence pertinent to the matter." Moseley points out the Board requested the report in its decision, rather than prior to the hearing. However, there is no evidence that Moseley attempted to submit the letter to the Board in compliance with its request or to reargue the matter with the Board based upon its letter. Therefore, the Court will not exercise its discretion to consider the letter in addition to the evidence contained in the record below.
The Court finds, upon review of the record and the evidence presented to the Board, that Moseley failed to meet her burden to show that 52 acres of the Property are eligible for farmland assessment so that the Board did not err by refusing to reinstate such status to the acreage. In addition, for the reasons set forth below, the Court finds that the Board erred in its decision to reinstate farmland status to 23.1 acres of the Property, pending a report from the State Forester.
The Board failed, in making its determination, to take into consideration the lease of the Property to BMR and its impact on the Property's use. At the Board hearing, Martin admits to the Board that the entire Property is leased to BMR for the sole use as a golf course. The lease itself states, "Moseley hereby agrees to lease to BMR and BMR hereby agrees to lease from Moseleyexclusive use of the Land, all in accordance with the terms of this Agreement." (Emphasis added.) The lease specifies, "During the term of this [lease], BMR shall use the Land solely as a golf course (inclusive of a clubhouse, pro shop, and other related facilities) and shall neither conduct not permit any other use or occupancy of the Land without the prior written consent of Moseley."
Whether land may be construed as "actively devoted to agricultural, horticultural or forest use" despite its simultaneous use for a non-exempt purpose, in this case, a golf course, is a matter of first impression for this Court. There is no question that the legal use, according to the terms of the lease, of all 180 acres of the Property, including the 52 "undisturbed" areas of the Property, is that of a golf course.
In addition, there is substantial evidence in the record that this acreage is in practical use by the golf course, as well, despite Moseley's arguments to the contrary. Martin stated himself "a golf course constantly needs trees. You develop a golf course, particularly one like this, you'll have a need for many, many years in the future to fill in trees which are strategically placed for safety and aesthetic reasons." Martin also stated, "[Y]ou have a lot of land in between and in the surrounding area, outlying the property itself, that has remained as it always has — trees. And that enhances the value of the golf course, the aesthetic value of the golf course." From review of the diagrams of the Property presented to the Board and by Martin's statements, it is clear that the forested areas are devoted to use by the golf course as landscaping and for "safety and aesthetic" purposes.
Therefore, the Court finds that there is substantial evidence in the record to support a finding that the portions of the Property at issue in this appeal are not "actively devoted" to agricultural use, as required by 9 Del. C. § 8329, but are instead devoted, legally and practically, to use as a golf course. Any proposed use by Moseley of portions of the Property, as outlined to the Board, are clearly incidental.
The Utah Supreme Court considered a similar issue in Salt Lake County ex rel. County Bd. of Equalization of Salt Lake County v. State Tax Comm'n ex rel. Kennecott Corp., Utah, 779 P.2d 1131 (1989) and, finding that land may be "actively" devoted to more than one use, granted farmland status to land that was in use, pursuant to lease agreements, simultaneously in manufacturing (as a buffer zone for a manufacturing facility) and for agricultural use as farmland. The Court finds that the facts of this case are distinguishable. In Salt Lake County, under the lease agreement with the manufacturer, the property owner retained the right to use the property in question for agricultural purposes or to lease it to others for agricultural purposes. Id. at 1131. Moseley did not retain the right in the lease agreement to use any portion of the Property for agricultural or other uses. Also, the property at issue in Salt Lake County could clearly be shown as actively"devoted" to agricultural use to grow grain and graze live stock under the second lease, rather than in incidental use, as demonstrated by the facts of this appeal.
In summary, the Court finds that the County met its initial burden of showing competent evidence to support its initial decision to remove farmland assessment status from the Property. The Court finds that the Property owner failed to submit competent evidence that 52 acres, or any portion of the Property, qualify for reinstatement as farmland. In addition, the Court finds that the Board erred in reinstating farmland status to 23.1 acres of the Property, pending a report from the State Forester. Therefore, the Court hereby REVERSES the Board's decision to restore farmland status of 23.1 acres of the Property and MODIFIES that decision to deny reinstatement of any portion of the Property to farmland status.
IT IS SO ORDERED.
Carl Goldstein, Judge