Jicarilla Apache Nation v. Rodarte

• Decision Date: 03 September 2004
• Docket Number: No. 28,128.,28,128.
• Parties: JICARILLA APACHE NATION, Plaintiff-Respondent, v. Arthur RODARTE, in his official capacity only, Rio Arriba County Assessor, Defendant-Petitioner.
• Court: New Mexico Supreme Court

103 P.3d 554

136 N.M. 630

2004 NMSC 35

JICARILLA APACHE NATION, Plaintiff-Respondent, v. Arthur RODARTE, in his official capacity only, Rio Arriba County Assessor, Defendant-Petitioner.

No. 28,128.

Supreme Court of New Mexico.

September 3, 2004.

Ted J. Trujillo, Espanola, NM, for Petitioner.

Nordhaus, Haltom, Taylor, Taradash & Bladh, L.L.P., Daniel I.S.J. Rey-Bear, Stephen H. Greetham, Albuquerque, NM, for Respondent.

Javier R. Lopez, Santa Fe, NM, for Amicus Curiae New Mexico Taxation & Revenue Department.

Canepa & Vidal, P.A., Rae Ann Shanley, Timothy J. Vidal, Santa Fe, NM, for Amicus Curiae Rancho Del Oso Pardo, Inc.

OPINION

CHAVEZ, Justice.

{1} Petitioner Arthur Rodarte, the Rio Arriba County Assessor acting in his official capacity only, appeals from a decision of the Court of Appeals which reversed the decision of the Rio Arriba County Valuation Protests Board (the Board). The Board had upheld Petitioner's property tax assessment which changed the classification of the bulk of the 32,075.80-acre property at the Lodge at Chama (the Lodge) from agricultural to "miscellaneous non-residential." The change resulted in a nearly ten-fold increase in the Lodge's assessed value, from $2,199,378 to $21,301,191. At issue is whether Petitioner and the Board properly concluded: (1) that neither the Lodge's private elk herd nor the public herd is "livestock" under the property tax code for purposes of determining whether the property in question is agricultural, and (2) that the Lodge's conservation agreement with the federal government was either not a proper soil-conservation agreement to qualify as an agricultural use or not the primary use of their land. Finding that the Board properly relied on a reasonable determination of the Property Tax Division of the Department of Taxation and Revenue (the Division), we reverse the Court of Appeals and uphold the Board's decision.

I. Background

{2} The 32,075.80-acre Lodge is located near Chama, New Mexico, and until 1989 or 1990 was known as the "Chama Land and Cattle Company." The Lodge bills itself as "one of the world's foremost outdoor recreational retreats." Respondent Jicarilla Apache Nation purchased the Lodge in 1995. From at least 1996 through 1999, the property was classified as agricultural, and Respondent paid ad valorem taxes on its private elk herd. In 2000, however, assessors at Petitioner's office received information that led them to conclude that the Lodge was used for recreational, rather than agricultural, purposes. Specifically, they received a copy of a letter from the Bureau of Indian Affairs (BIA) to the Jicarilla Apache Nation that seemed to indicate the Lodge was used primarily as a recreational retreat, which was confirmed by looking at the Lodge's website. Additionally, the assessors learned from attending a seminar on the subject that the Department of Taxation did not consider elk to be livestock under the Property Tax Code. In fact, the assessors and the Board relied on Property Tax Division (P.T.D.) General Order No. 99-25, issued by the Division. In that order, as required by NMSA 1978, § 7-36-21(D) (1975), the Division determined the "various classes of livestock and the value of each class." The order does not list "elk" among the various classes of livestock. As a result, Petitioner issued an amended notice of valuation that reclassified the land from agricultural to miscellaneous non-residential. Respondent protested to the Board, which conducted a hearing on the claim.

{3} Before the hearing, the parties resolved a number of the potential issues facing the Board by stipulation. The parties agreed to the classification and valuation of the fifteen-acre homesite: the four acres underlying the residential structures and lodge structure are valued at $10,000 per acre, and the remaining eleven acres are valued at $664 per acre. Additionally, the parties stipulated that twenty acres of the property are classified as irrigated land and valued at $150 per acre, and five-thousand acres on the western portion of the property are classified as grazing land and valued at $2.00 an acre. Finally, the parties stipulated that "[t]he only issue in controversy in this action is whether the remaining 27,040.80 acres at the Property should be classified and valued as agricultural land."

{4} At the hearing, it was established that the 27,040.80 acres covers two types of land. First, the Lodge operates two 3,200-acre state-licensed game parks on which it maintains its private elk herd. These game preserves are each enclosed by an eight-foot-high fence. Respondent actively manages the private elk herd through a heavily regulated genetic improvement breeding program and irrigates the land to produce feed. The Lodge maintains an elk handling facility which allows year-round handling of up to 200 elk at a time for testing, tagging and other measurements, and feeds some of the elk from troughs. Second, the Lodge maintains the remaining land, the "uplands," as a habitat for the wild public herd of elk that graze there.

{5} The uplands portion of the property is maintained consistent with a conservation plan entered into with the United States Department of Agriculture (the USDA) as part of its Environmental Quality Incentives Program (EQIP). The Lodge's stated purpose for entering into the agreement was to improve the elk habitat in order to improve "the production, quality, and health of wild elk there." Under the agreement, the Lodge agreed to construct fences; to irrigate to minimize soil erosion and nutrient losses; to manage grazing to protect the soil resources; and to manage pasture and hayland to maintain enough soil cover. In return, the USDA agreed to share some of the costs. Respondent also manages its timber resources in the uplands in order to maximize the elk habitat.

{6} The Lodge maintains the private elk herds on the game parks so that it can sell big game hunting packages. These packages include food, lodging, and guide services, and can cost up to $13,000 per person. The Lodge also sells permits, which it has received from the state, for its customers to hunt the wild elk in the uplands area. Because the quality of the private herd of elk is better than that of the wild herd, the permits to hunt from the public herd are less expensive. Nearly all of the hunters who have this package take home the packaged meat from the animal and have the carcasses mounted. The Lodge also sold some of the elk to another farm in 1999, but most elk are "harvested" through these paid hunting packages.

{7} On these facts, the Board found that "the use of that property is primarily as a habitat for elk, [and] that all other uses, including arguably agricultural uses, are secondary and incidental to that primary use." Because the Board agreed with the Petitioner that the Division does not consider elk to be livestock for purposes of the agricultural exemption of the Property Tax Code, it concluded that the primary use of the land is not agricultural. With respect to the soil conservation agreement, the Board found that it "has, as its primary purpose, the development and maintenance of a habitat suitable for the maintenance of elk, not soil conservation." Indeed, the Board found that "[a]ny soil conservation effected by the plan is incidental and secondary to this primary purpose. As such, the plan does not qualify as a soil conservation program pursuant to [the Property Tax Code]."

{8} Respondent filed an appeal to the district court, which certified the case to the Court of Appeals as one involving a substantial public interest. See NMSA 1978, § 39-3-1.1(F) (1999). The Court of Appeals accepted certification and reversed the decision of the Board. In so doing, the Court of Appeals held that the private herd of livestock fits the statutory definition of "other domestic animals useful to man," NMSA 1978, § 7-35-2(C) (1994), but that the public herd in the uplands region did not. Jicarilla Apache Nation v. Rio Arriba County Assessor, 2004-NMCA-055, ¶¶ 28, 35, 135 N.M. 630, 92 P.3d 642. The Court of Appeals also held that the agreement between the Lodge and the USDA represented a valid soil conservation agreement, and that under the Department of Taxation and Revenue's own regulations, the mere existence of such an agreement is sufficient to establish that the primary use of the land it covers is agricultural. Id. ¶¶ 38-39. We reverse both of these holdings of the Court of Appeals.

II. Discussion

{9} Under the Property Tax Code, property is typically valued as "its market value as determined by application of the sales of comparable property, income or cost methods of valuation or any combination of these methods." NMSA 1978, § 7-36-15(B) (1995). The Legislature has, however, provided for a different valuation method for "land used primarily for agricultural purposes," which is instead "the land's capacity to produce agricultural products." NMSA 1978, § 7-36-20(A) (1997). Typically, as it did in this case, this method of valuation results in a much lower tax burden. We have previously identified the policy underlying this agricultural exemption: "It is clear that the legislative intent behind this special method of property tax valuation is to aid the small subsistence farmers in our state." County of Bernalillo v. Ambell, 94 N.M. 395, 397, 611 P.2d 218, 220 (1980). Although we are not certain that the size of the operation that puts land to agricultural use is significant, it is certain that the exception is designed to promote bona fide agriculture in New Mexico. In determining whether a particular property is being put to an agricultural use, we must bear in mind this policy and the fact that it is an exception to the general method of valuation.

{10} Under the same statute, "agricultural use" is defined as "the use of land for the production of plants, crops, trees, forest products, orchard crops, livestock, poultry or fish." Section...