Plaintiffs Baker, landowners, sued the county tax assessor to have their property appraised for farm use. The property was used to graze cattle and horses but only for about two months of the year. The rest of the time it lay fallow. The Tax Court in this opinion concludes that such a limited agricultural use of the land does not qualify it for farm use appraisal.
Plaintiffs appeal defendant's disqualification of their land from farm use special assessment for the 2000-01 tax year. The property is identified as Jackson County Assessor's Account No. 1-016292-1. Trial was held April 10, 2001, in Medford. Dianne Baker appeared for the plaintiffs. Zach Baker, plaintiffs' son, testified for plaintiffs. Ed Good, Farm/Forest Appraiser, appeared for defendant.
STATEMENT OF FACTS
The subject property is located in a exclusive farm use (EFU) zone. The property totals 140 acres. (Def's Ex A.) The property contains plaintiffs' home, Mr. Baker's welding shop and a partially-fenced 40 acre pasture. A small portion of the property, 9.2 acres, is zoned forestland. The bulk of the property is open range land. Most of the property, 114 acres, was disqualified from special assessment. Twenty-six acres, including the 9.2 acres zoned forestland, were not disqualified.
The plaintiffs have owned the property since 1971. From 1971 through 1989 plaintiffs or their neighbors grazed cattle on the property every year. Due to the fragile state of the soil, since 1990, the property has been grazed every other year by neighbors. (Ptfs' Ltr from Gary and Dianne Baker, dated August 6, 2000.) In 1991, the Evans Creek fire affected the subject property. The fire burned the 9.2 acres zoned forestland and part of the pasture fence. After the fire, plaintiffs salvaged the marketable timber. In the years since the fire, plaintiffs have planted over 4,000 pine trees. (Def's Ex A at 2.) Ms. Baker testified that ideally the property would have a forest-related zoning. At one point, the state of Oregon was willing to put the land in a forest trust. Plaintiffs were unwilling to take that step because all the hardwood trees would have been killed with the entire area replanted in evergreens.
The property is steep with poor soil. It is marginal land that is, according to Mr. Good, "somewhat unusable, except in spring." He testified that it would be hard to grow anything on the property and it would be better classified as forest reserve. Plaintiffs agree that the land is marginal. In their March 14, 2000, Application for Special Assessment of Farmland plaintiffs stated that:
"Our land is so marginal it doesn't have enough grazing to sustain even the six cows and calves so we sold them. Jim and Jean Estremado said they didn't want to graze the land even for free as it is so steep and wooded. Therefore since the Evans Creek fire we have been cleaning up and reforesting as weather and soil conditions allow."
Ms. Baker testified that their neighbors, the Sorensons, use the pasture for approximately 20 cattle each year. The cattle use the pasture for about a month, depending on the available water. The Sorensons pay no rent for the use of the pasture. Plaintiffs have also allowed Don Hagglund to use the pasture. Mr Hagglund shows and trains cutting horses. In October 2000, Mr. Hagglund paid plaintiffs $200 for pasture rental. There was no testimony as to how frequently Mr. Hagglund's horses used the pasture. It is also unclear to the court the rental period represented by the $200 or whether Mr. Hagglund has previously paid for pasture rental.
Contrary to his parents' Application for Special Assessment of Farmland, Zach Baker testified that approximately 40 cattle and calfs owned by the Estremados use the open range for a month or two each year. This testimony was supported by a letter from Mr. Estremado stating that "cattle are permitted to run on open range. * * * I plan to continue running our cattle in that same area in the future. Estremado Ranch is going to run cattle on Gary and Diane Baker's property in 2001 and in the forseeable [sic] future." (Ptfs' Ex Ltr from Jim Estremado, dated Oct 10, 2000.) Zach Baker also testified that he sometimes see tracks when he walks through the property.
Mr. Good testified that after defendant received plaintiffs' Application for Special Assessment of Farmland the defendant was concerned that the plaintiffs were not really farming the subject property. Mr. Good decided to do a field inspection of the property. He met with Gary and Zach Baker. He spent one to one and one half hours on the property. He walked the property with Zach Baker looking for cow trails and/or other evidence of use by cattle. Mr. Good testified that he found no evidence of farm use. He also confirmed with Gary Baker that plaintiffs did not farm the property in 1999. Mr. Good testified that the property did not qualify for forestland because there were not enough trees on the property. As a result of his inspection and conversation with Gary and Zach Baker, Mr. Good disqualified the property from farm use special assessment. He did however, lower the value of the property because of the topography. The prior valuation of the property had no adjustment for topography.
The Oregon Legislature created a special assessment program for property used for farm purposes. Property located within an exclusive farm use (EFU) zone is entitled to special assessment if the property is being used exclusively for farm use. ORS 308A.062(1). Farm use is defined at ORS 215.203(2)(a). The relevant portions of that statute provide:
"As used in this section, 'farm use' means the current employment of land for the primary purpose of obtaining a profit in money by raising, harvesting and selling crops or the feeding, breeding, management and sale of, or the produce of, livestock, poultry, fur-bearing animals or honeybees or for dairying and the sale of dairy products or any other agricultural or horticultural use or animal husbandry or any combination thereof. 'Farm use' includes the preparation, storage and disposal by marketing or otherwise of the products or by-products raised on such land for human or animal use. * * * 'Farm use' includes the on-site construction and maintenance of equipment and facilities used for the activities described in this subsection."
The issue in this case is whether a casual, limited use of property is sufficient use to qualify the property for farm use special assessment. As this court found in Everhart v. Dept. of Rev., 15 OTR 76, 79 (1999),
"[The] definition [of farm use] has three basic elements. First, that the land be currently employed. 'Current employment' includes but is not limited to all of the uses listed in ORS 215.203(2)(b). The use of the word 'current' refers to the present use of the land and suggests that the past or future use is largely irrelevant. The word 'employment' suggests an active, purposeful, directed use of the land."
Plaintiffs' situation is similar to the situation faced by the plaintiffs in Ameral v. Dept. of Rev., 14 OTR 56 (1996). Ameral owned 197 acres that were zoned EFU. Ameral leased the property to Stubbs. Stubbs used the property to pasture four horses. Ameral testified "that the property was only good for pasturing from April or May to June." Id. at 57. Stubbs did not pay Ameral for the use of the pasture; instead the men entered into a barter arrangement. Stubbs testified that he used the horses in his ranching activities and for pack animals. Stubbs ranching activities consisted of six or seven cows. Id.
The issue before the court in Ameral was whether boarding four horses for two or three months a year "was a sufficient farm use to qualify for special assessment." Id. at 59. The court noted that ORS 215.203(2)(a) focuses on the use of the property rather than the ownership. Id. at 60 (citing Taylor v. Dept. of Rev., 6 OTR 496, 500 (1976)). The court first determined that Stubbs' use of the property was a personal use, rather than a qualified farm activity. The court then noted that:
"Taxpayer's land was used only two to three months each year for farm use, which is insufficient to qualify for special assessment. The 'day-to-day activities' rather than a few months each year must be directed at achieving a profit. Taxpayer complains that the property is unsuitable for anything else the rest of the year. That may be true, but it does not entitle taxpayer to special assessment."
The Ameral court looked at the legislative policy in farm use special assessment. Citing Taylor, it found that "[j]ustification is found in the retention of farmland for agricultural production in spite of intense economic competition to divert such land to allegedly 'higher and better' uses. To continue the special farm use in the case of land unused or unusable would defeat the legislative policy." Ameral, 14 OTR at 60-61 (emphasis in original) (quoting Taylor, 6 OTR at 501). To paraphrase, the legislative intent for farm use special assessment is to save farmland for agricultural uses. If the land is not suitable for agricultural uses, then there is no reason for it to be in special assessment.
The use of the subject property is limited to one or two months a year. This is even less use than in Ameral. The use of the subject property was not sufficient to qualify it for farm use special assessment. Further, as this court found in Everhart, ORS 215.203(2)(a) "suggests an active, purposeful, directed use of the land." Everhart, 15 OTR at 79. Plaintiffs' use of their property was more casual than "active, purposeful, [or] directed."
Plaintiffs' additional tax liability is, at this point, deferred. ORS 308A.706(1)(a) states that:
"(1) Notwithstanding that land may have been disqualified from special assessment, the additional taxes described under ORS 308A.703 shall not be imposed and shall remain a potential tax liability if, as of the date the disqualification is taken into account on the assessment and tax roll, the land is any of the following:
"(a) Disqualified exclusive farm use zone farmland or nonexclusive farm use zone farmland that:
"(A) Is not being used as farmland; and
"(B) Is not being used for industrial, commercial, residential or other use that is incompatible with a purpose to return the land to farm use."
At the time of the subject property's disqualification, plaintiffs were making limited use of the property. The "potential tax liability" described above only becomes an actual tax liability if the use of the subject property changes "to an industrial, commercial, residential or other use incompatible with a return of the land to farm use[.]" ORS 308A.712(2).
Consistent with this court's decision in Ameral, the court finds that the use of the subject property was not sufficient to qualify it for farm use special assessment. Further, given the court's language in Everhart interpreting ORS 215.203(2)(a), the court also finds that the use of the subject property must be something more than an occasional cow wandering through the property before the property may qualify for special assessment. Now, therefore;
IT IS THE DECISION OF THE COURT that plaintiffs' appeal is denied.
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