Mowery v. County of Kanabec
Minn. Tax Ct. 10th Dist.
2005 WL 94824
Jan. 12, 2005
Summary of Opinion
Keeping and sale
of horses is held to be an agricultural use. Boarding and training are not
agricultural uses as these activities do not produce agricultural products.
Text of Opinion
The Court, having
heard and considered the evidence adduced at the hearing, and upon all of the
files, records and proceedings herein, now makes the following:
FINDINGS OF FACT
have sufficient interest in the property to maintain this petition; all
statutory and jurisdictional requirements have been complied with, and the
Court has jurisdiction over the subject matter of the action and the parties
own 40 acres of real estate located at 1975 177th Avenue, Mora, Minnesota,
described as: SE1/4 of NE 1/4 of Section 27, Township 039, Range 024 ("Subject
bought the Subject Property in late 1999. In 2000, they began building their
house, a horse barn, and a shelter on approximately 5 acres of the Subject
4. After the
buildings were completed on the Subject Property, Petitioners began breeding
and raising horses on it. They had 9 horses on the Subject Property in 2001.
On the date of trial, there were only 8 horses on the Subject Property.
Petitioners sell horses on the internet and through their trainer in Loretto,
Minnesota. They have no employees located on the Subject Property.
5. On 30 acres of
the 40-acre parcel, Petitioners grow hay and maintain a pasture for the
horses. Above and beyond the hay used to feed their horses, Petitioners sold
hay to third parties in the amount of $1,200 during each of the years 2002 and
2003. In addition, Petitioners earned $1,700 from the sale of a horse in 2003.
6. In 1999, the
Subject Property was classified as agricultural. In 2000, the Kanabec County
Assessor's Office classified it as residential/homestead for the January 2,
2001 assessment due in 2002.
7. On December
22, 1999, at the time Petitioners purchased the Subject Property, they checked
the box for Residential and Single Family use on the Certificate of Real
Estate Value ("CRV"). Although they intended at the time to both farm and live
on the Subject Property, Petitioners filled out the CRV as they did because
they thought it would be easier to obtain a home loan than an agricultural
8. The Subject
Property is primarily used for agricultural purposes.
classification of the Subject Property as of January 2, 2003, except for the
house, garage and one acre surrounding it, shall be changed on the books and
records of Kanabec County from residential to agricultural.
2. Real estate
taxes due and payable in 2003 shall be recomputed accordingly and refunds, if
any, paid to Petitioners as required by such computations, together with
interest from the original date of payment.
IT IS SO ORDERED.
THIS IS A FINAL ORDER. A STAY OF FIFTEEN DAYS IS HEREBY ORDERED.
The issue in this
case is the appropriate classification of James and Janice Mowry's
("Petitioners") property in Kanabec County. Respondent Kanabec County ("the
County") argues that the property should be classified residential, while
Petitioners argue that it should be classified agricultural.
On April 30,
2004, Petitioners filed a Petition in Kanabec County District Court
challenging the January 2, 2003 classification of their 40-acre parcel of land
located in Mora, Minnesota, Property I.D. No. 02-02275-10. The property had
been classified as residential before it was purchased by Petitioners. On
their Certificate of Real Estate Value, Petitioners checked the box indicating
they intended to use the Subject Property as Residential and Single Family. On
August 16, 2002, Petitioner James Mowry ("Mr.Mowry") had a telephone
conversation with Mark Larson ("Mr.Larson"), then of the Kanabec County
Assessor's Office, in which he asked about the Subject Property qualifying for
classification as agricultural. Mr. Mowry advised Mr. Larson that he raised
horses and grew hay on the Subject Property. Mr. Larson explained to Mr. Lowry
that the agricultural classification requires that an agricultural product be
produced, and horses would only be considered livestock if they were being
raised for another use such as animal food. He further indicated that
otherwise, horses are considered more like pets. As for the hay production,
Mr. Larson said that the Petitioners would need to produce a Schedule F from
their Federal Income Tax Return or something similar verifying they were
selling approximately the equivalent of 10 acres of hay to qualify the Subject
Property as agricultural.
In April 2003,
the County sent Petitioners the 2004 Payable Notice of Valuation and
Classification which again classified the Subject Property as agricultural. On
May 8, 2003, Petitioners appealed to the Local Board of Appeal and
Equalization, which decided that the classification would be changed to
agricultural upon receipt of a copy of Petitioners' Schedule F showing that
they sold hay. On June 18, 2003, Petitioners appealed to the County Board of
Equalization, which tabled the matter until Petitioners could produce a copy
of their Schedule F. On June 25, 2003, Petitioners presented their Schedule F
to Kanabec County Assessor Sue Kondratowicz ("Ms.Kondratowicz"), along with a
letter from their certified public accountant stating that $1,200 in sales
were due to the sale of hay and horses. At the County Board meeting that same
day, the Board decided to leave the Subject Property classification as
residential. The classification was reconsidered by the County Board on
September 23, 2003, at which time the classification as residential was
confirmed. That same date, Ms. Kondratowicz sent Petitioners a letter again
advising them that raising horses does not constitute an agricultural pursuit
for property tax purposes. Petitioners then brought this appeal, challenging
the County's classification of the Subject Property.
classification is presumed to be valid. Minn.Stat. § 271.06, subd. 6.
Petitioners bear the burden to show that a different classification should be
applied to the subject property. In this case, Petitioners must prove that the
business conducted on the Subject Property was primarily for agricultural
determination of classification is controlled by the property tax
classification statute, Minn.Stat. § 273.13. Minnesota Statute Section 273.13,
subd. 23(c) reads in relevant part as follows:
... means contiguous acreage of ten acres or more, used during the preceding
year for agricultural purposes. "Agricultural purposes" as used in this
section means the raising or cultivation of agricultural products....
273.13, subd. 23(c).
animals, dairy products, poultry and poultry products, fur-bearing animals,
horticultural and nursery stock ..., fruit of all kinds, vegetables, forage,
grains, bees, and apiary products by the owner;
273.13, subd. 23(e)(1).
In Ramberg v.
County of Washington, File No. C5-90-2078 (Minn. Tax Ct. Feb. 5, 1991), we
that are held solely for breeding and/or resale is similar to raising other
livestock ... Inherent in the term 'agricultural product' is the idea that the
animal is being fed and kept for ultimate disposition and not for an interim
Id.; see also
Schneider v. County of Dakota, File No. 95660 (Minn. Tax Ct. Feb. 9, 1984)
("Boarding and training horses, as compared to breeding, raising and selling
horses, is not an agricultural pursuit because there is no agricultural
product produced and sold.")
determined that where the petitioner bred and raised horses, as well as grew
hay which she sold to others and used to feed her own horses, the property
should be classified as agricultural in Cassman v. County of Kanabec, File No.
C0-96-51 (Minn. Tax Ct. Oct. 1, 1996). See also Equine Hospital, Inc. v.
County of Dakota, File No. C0-92-7559 (Minn. Tax Ct. Nov. 2, 1993) ("A review
of prior cases decided by this Court and the legislative history of Minn.Stat.
§ 273.13, subd. 23 leads us to conclude that the activity of 'raising'
livestock must occur to qualify for agricultural classification. Raising
horses may qualify for the agricultural classification....")
Here, the County
interprets the statutory term "livestock" found in Minn.Stat. § 273.13, subd.
23(c) to exclude horses. The County relies upon the definition of "livestock"
found in Minn.Stat. § 17A.03, subd. 5, which includes only those horses that
are sold for slaughter. We disagree. Minnesota Statute Section 17A.03, subd. 1
expressly limits the scope of that definition" to Chapter 17A, the livestock
market licensing laws. Further, we note that at least one other Minnesota
statute defining "livestock" refers to horses as livestock without limiting
the term to only those sold for slaughter. See, e.g., Minn.Stat. § 31.59, subd.
3 (" 'Livestock' means cattle, horses, swine, sheep and goats.").
Additionally, there is no case law authority before the Court to suggest that
horses raised for breeding and/or resale do not fit within the definition of
"livestock." In fact, the only case law cited by either party is to the
contrary. In Ramberg v. County of Washington and Cassman v. County of Kanabec,
we found that horses held solely for breeding and/or resale is similar to
raising other livestock. In this case, there was undisputed testimony at trial
that Petitioners raised, bred, and sold horses that were kept on the Subject
Property and that Petitioners were engaged in the business of raising horses
for breeding and/or resale both prior and subsequent to moving to the Subject
Petitioners grow almost 30 acres of hay to feed their own horses and to sell
to third parties. The 2002 Schedule F showed $1,200 of hay sold, and the 2003
Schedule F showed a total of $3,018 for the sale of hay and a horse. $1,700 of
this amount was for the sale of a horse, leaving $1,318 as the amount
attributable to selling hay in 2003. Under Minn.Stat. § 273.13, subd. 23(c),
"[a]gricultural land ... means contiguous acreage of ten acres or more used
during the preceding year for agricultural purposes." The County contends that
since hay sold for $4.00 a bale, Petitioners sold only 300 bales of hay in
2002 and less than 400 bales in 2003. The County then calculates that the
bales of hay sold indicate that only 3.5 acres of Petitioners' land was used
to grow hay. While such mathematical calculations are based upon aerial photos
and the assessor's opinions, we do not find them persuasive for two principal
reasons. First, they do not take into account the amount of hay Petitioners
used to feed their own horses. Second, we are convinced from the record that
Petitioners used almost 30 acres of the Subject Property to grow hay for sale
to others and for the horses they raised.
find Petitioners have satisfied their burden of proving that the Subject
Property is properly classified agricultural.
For the foregoing
reasons, we conclude that the Subject Property, excluding the house, garage,
and surrounding one acre, should be classified agricultural under Minn.Stat. §
273.13, subd. 23(c) because 10 acres or more contiguous acres are used for
agricultural purposes, namely raising and breeding horses and growing hay.
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