COUNTY BD. OF EQUAL. v. Stichting Mayflower Recreational Fonds

• Decision Date: 07 July 2000
• Docket Number: No. 980013.,980013.
• Citation: 6 P.3d 559,2000 UT 57
• Parties: COUNTY BOARD OF EQUALIZATION OF WASATCH COUNTY, State of Utah, Petitioner, v. STICHTING MAYFLOWER RECREATIONAL FONDS, Stichting Mayflower Mountain Fonds, and Utah State Tax Commission, Respondents.
• Court: Utah Supreme Court

6 P.3d 559

2000 UT 57

COUNTY BOARD OF EQUALIZATION OF WASATCH COUNTY, State of Utah, Petitioner, v. STICHTING MAYFLOWER RECREATIONAL FONDS, Stichting Mayflower Mountain Fonds, and Utah State Tax Commission, Respondents.

No. 980013.

Supreme Court of Utah.

July 7, 2000.

Daniel H. Matthews, Joseph T. Dunbeck, Jr., Heber City, for petitioner.

Jan Graham, Att'y Gen., Timothy A. Bodily, John C. McCarrey, Kelly W. Wright, Asst. Att'ys Gen., E. Craig Smay, Salt Lake City, for respondents.

On Certiorari to the Utah Court of Appeals

DURRANT, Justice:

¶1 We granted petitions for a writ of certiorari to review the Utah Court of Appeals' decision in County Board of Equalization of Wasatch County v. Stichting Mayflower Recreational Fonds, 943 P.2d 238 (Utah Ct.App.1997). In that case, the court of appeals affirmed a ruling by the Utah State Tax Commission (Commission) that three parcels of real property owned by Stichting Mayflower Recreational Fonds (Mayflower) qualified for preferential greenbelt tax treatment under the Farmland Assessment Act (FAA) for the 1992 tax year. See id. at 247. For the 1993 tax year, however, the court of appeals partially reversed the Commission's ruling and held that only two of Mayflower's three parcels qualified for greenbelt status. We affirm in part and reverse in part.

BACKGROUND

¶ 2 Mayflower owns several parcels of land in Wasatch County, Utah. The instant case concerns only three of these parcels (collectively referred to as the Mayflower property or parcels): (1) the North parcel, (2) the Density Determination parcel, and (3) the South Mountain parcel.¹ The North parcel lies east of U.S. 40 and slightly northwest of the Jordanelle reservoir. It contains 657.17 acres. Though nearby, the North parcel does not border either of the other two parcels. The Density Determination parcel lies south of the North parcel and extends west from Jordanelle. This parcel contains 1268.23 acres. U.S. 40 separates the northeastern portion from the bulk of the Density Determination parcel. The southwestern edge of the Density Determination parcel borders a northeastern edge of the South Mountain parcel. The South Mountain parcel extends west and southwest of this borderline. It contains 1495.11 acres.

¶ 3 In the early 1980s, Mayflower began leasing these three parcels to Luke Gillmore (Gillmore), an officer of Gillmore Livestock Company. Gillmore grazes sheep and cattle on the Mayflower property and 1560 acres of his own adjoining land. Based on Gillmore's agricultural use of the land, Wasatch County (the County) granted greenbelt status to the Mayflower property beginning in 1985. ¶ 4 In 1992, the County determined that the Mayflower property no longer merited greenbelt status. Thus, the County assessed the parcels at their full fair market value for the 1993 tax year and imposed a rollback tax for 1988 to 1992. Mayflower appealed this determination to the Wasatch County Board of Equalization (the Board). The Board sustained the County's decision despite the hearing examiner's recommendation that sufficient grazing occurred on the Mayflower property to justify continued greenbelt status. Mayflower then appealed to the Commission.

¶ 5 At the Commission hearing, Gillmore testified concerning his use of the Mayflower property. Gillmore stated that he has produced livestock all his life and that his family has been in the livestock business since the 1800s. Gillmore testified that each year he grazes roughly 1200 to 1500 sheep and between 160 to 170 head of cattle on his own and Mayflower's property. Each summer, Gillmore transports the animals to the properties and then drops them off at various spots. From these drop-off spots, the animals can graze the rest of the properties because the Mayflower and Gillmore properties are essentially unfenced. Except for U.S. 40, no physical barriers prevent the livestock from grazing the whole area. Gillmore testified that the livestock did, in fact, graze the "entire length" of the combined properties. The Mayflower property, however, is especially important for Gillmore's grazing operation because it contains "a lot more water" than does the Gillmore land. Without the Mayflower property, Gillmore testified that he could not provide his animals sufficient water.

¶ 6 For several years in the mid to late 1980s, Gillmore set up a sheep camp each summer near the western edge of the South Mountain parcel. Gillmore would maintain this sheep camp for the entire summer, thereby grazing the land for a longer period of time than he had theretofore done. Accordingly, Gillmore paid Mayflower additional rent for this extended grazing of the South Mountain parcel. Sometime in the late 1980s, Gillmore stopped this practice due to the encroachment of civilization. With the growth of nearby developments in Park City and Deer Valley, more and more domestic dogs had appeared in the area. Because the dogs posed a serious threat to the sheep, Gillmore stopped taking the whole herd to the South Mountain parcel. As a result, Gillmore also stopped paying the extra rent for his extended use of the South Mountain parcel. However, he continued to pay the original base rent amount, which still entitled him to graze the South Mountain parcel. Although Gillmore no longer set up a sheep camp on the South Mountain property, "different bunches" of sheep periodically still wandered onto the parcel and grazed. Some cattle did likewise, although to a much lesser degree because of the parcel's steeper terrain. The livestock would graze South Mountain in this manner until Gillmore learned they were there and then he would return them to the herd. Gillmore could not estimate the number of livestock that continued to graze the South Mountain parcel in this manner.

¶ 7 Based on this and other evidence, the Commission reversed the Board's decision. The Commission concluded that the Mayflower property sufficiently complied with FAA requirements, thereby warranting greenbelt status for the 1992 and 1993 tax years. Accordingly, the Commission granted the property greenbelt status and lifted the rollback tax the County had imposed. The Board petitioned the Commission to reconsider its order but was denied. The Board then petitioned this court to review the Commission's decision. We transferred the case to the court of appeals pursuant to Utah Code Ann. § 78-2-2(4) (1996). The court of appeals affirmed the Commission's ruling as to the 1992 tax year. See Stichting Mayflower, 943 P.2d 238, 247 (Utah Ct.App.1997)

. As for the Commission's decision concerning the 1993 tax year, the court of appeals partially reversed the Commission by holding that the South Mountain parcel should be assessed separately and as a separate parcel it did not qualify for greenbelt treatment. See id. The court of appeals also held that there were no grounds for imposing a rollback tax. See id. at n. 4. Both Mayflower and the Board filed petitions for writ of certiorari to review the court of appeals' decision. We granted those petitions.

¶ 8 The parties have raised numerous issues for review, which center on two fundamental questions: (1) whether the South Mountain parcel should be assessed by itself or in conjunction with the other parcels, and (2) whether the appropriate unit to be assessed qualified for greenbelt status for the 1992 and 1993 tax years.

STANDARD OF REVIEW

¶ 9 On certiorari, we review the court of appeals' decision for correctness. The correctness of the court of appeals' decision depends on whether it accurately reviewed the Commission's decision based on the appropriate standard of review. See Newspaper Agency Corp. v. Auditing Div., 938 P.2d 266, 267-68 (Utah 1997)

. In this case, the Utah Code prescribes the appropriate standard for reviewing a decision by the Commission. The Commission's legal conclusions are reviewed under a correction of error standard. See Utah Code Ann. § 59-1-610(1)(b) (1996). The Commission's written findings of fact are reviewed under a substantial evidence standard. See id. § 59-1-610(1)(a). This means the reviewing court—the court of appeals in this case— should uphold the Commission's factual findings if the findings are supported by substantial evidence. See Schmidt v. Utah State Tax Comm'n, 1999 UT 48, ¶ 7, 980 P.2d 690. "`Substantial evidence' is that quantum and quality of relevant evidence which is adequate to convince a reasonable mind to support a conclusion." Id. (citations omitted).

ANALYSIS

¶ 10 The FAA provides an exception to the general rule that land is assessed for property tax purposes based on its "highest and best" use. See Board of Equalization of Salt Lake County v. Utah State Tax Comm'n ex rel. Judd, 846 P.2d 1292, 1295 (Utah 1993)

. Under the FAA, qualifying agricultural property is taxed according to its agricultural value, whether or not this is the land's "highest and best" use. The legislature enacted the FAA because it recognized that

urban growth was encroaching on rural areas and that if farmland was taxed at market value, farmers whose properties were located near expanding urban areas would find it difficult to continue to devote their property to low-profit farming operations. Thus, the purpose of the FAA was to benefit those individuals and entities that continued to use land for agricultural purposes, particularly when the property was located near urban development.

Id. at 1297.

I. DETERMINING THE APPROPRIATE PROPERTY UNIT TO BE ASSESSED

¶ 11 To properly apply a property tax statute like the FAA, one must first determine the unit of property to be assessed. In the instant case, the Commission determined that the Mayflower property should be assessed as a whole, not parcel by parcel. The court of appeals concluded that the South Mountain parcel should be assessed separately, at least for the 1993 tax year. See Stichting Mayflower, 943 P.2d at 246 (Utah Ct.App.1997)

. The court of appeals gave several reasons for this conclusion. Fir...