Horse Farm

Harvey and Rosemary Jacobsen, Petitioners, v. County of Washington, Respondent.


Case Information:



Docket/Court: 82-CV-10-2760, Minnesota Tax Court Tenth Judicial District County of Washington Regular Division



Date Issued: 01/04/2012



Tax Type(s): Property



The Honorable Sheryl A. Ramstad, Judge of the Minnesota Tax Court, cross motions for summary judgment on December 16, 2011, at the Minnesota Tax Court courtroom 210, 25 Rev. Dr. Martin Luther king Jr. Blvd., St. Paul, Minnesota



Allison Eklund, Attorney at Law, represented the Petitioner.



Richard Hodsdon, Assistant Washington County Attorney, represented the Respondent.



OPINION

ORDER

Both parties submitted post hearing briefs. The matter was submitted to the Court for decision on December 21, 2011.



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:



ORDER

1. Petitioners' Motion for Summary Judgment is hereby denied.

2. Respondent's Motion for Summary Judgment is hereby granted.

IT IS SO ORDERED. LET JUDGMENT BE ENTERED ACCORDINGLY. A STAY OF FIFTEEN DAYS IS HEREBY ORDERED. THIS IS A FINAL ORDER.



BY THE COURT,

_______

Sheryl A. Ramstad, Judge

MINNESOTA TAX COURT

Memorandum

Background

Harvey and Rosemary Jacobsen (“Petitioners”) contend that their property, located at 6958 40 th Street North, Oakdale, Minnesota (“Subject Property”), 1 should be classified as agricultural under Minn. Stat. § 273.13 and should be granted Green Acres treatment under Minn. Stat. § 273.11, as of January 2, 2009. Washington County (“Respondent”) claims that because less than ten acres of the Subject Property is in actual production, Petitioners are not using it in a manner that meets the classification sought.



Petitioners and Respondent bring cross-motions for summary judgment, agreeing that there is no dispute of material facts so that the case is ripe for summary judgment. For the reasons set forth below, we deny Petitioners' motion and grant Respondent's Motion.



Facts

Petitioners are the fee-simple owners of three contiguous parcels of land, totaling 14.72 acres, in Washington County, City of Oakdale. It is undisputed that two of the three parcels (Parcels 1 and 2) comprising the Subject Property are agricultural. Together, these parcels total less than 5 acres. Parcel 3, comprised of 9.76acres, is where Petitioners' home and approximately two acres of wetland are located. Petitioners have lived in their home since 1973. Until the January 2, 2009, assessment, the Subject Property had been classified as agricultural. The parties agree that whether the Subject Property should be classified as agricultural turns upon whether Parcel 3 is considered agricultural.



Petitioner Harvey Jacobsen has been in the business of raising or boarding racehorses for racing and sale since 1973. He began boarding horses in 1973 and also raised quarter horses for sale. In the early 1980's, he began breeding and racing thoroughbreds at tracks in the United States and Canada, and he expanded his business after Canterbury Downs opened in the late 1980's. In the thoroughbred business, he has stabled and owned, in whole or in part, a syndicate of up to 30 horses on the Subject Property. From 2007 to the present, he has had at least 3 and up to 7 or 8 horses stabled on the Subject Property, with fluctuations based upon foaling, weaning, training, racing, and sales each year.



When the Washington County Assessor staff physically examined the Subject Property on May 10, 2010, they determined that it did not have ten or more contiguous acres in agricultural production. They also noted that Petitioners had two horses and two turkeys on the Subject Property. In addition, they reviewed aerial photos that showed the Subject Property as not having ten acres in agricultural production. Specifically, the assessor staff found that Parcel 3, which contains 9.76 acres, has Petitioners' personal residence on a one acre site, two acres of DNR-classified wetland, and the balance in woods and waste. They also noted that the area of woods were not being used for agricultural production, were not fenced, and were not used for pasture or any other agricultural purpose. The other two contiguous parcels, where the pasture and farm building and paddock are located, had approximately three acres that were in agricultural use. The balance of these two parcels were yard and woods not fenced for livestock and contained no livestock or pasture land or appear in any other way to be used for any form of agriculture.



The issues in this case are:



(1) whether Petitioners' 15-acre family farm should be classified as an agricultural homestead under Minn. Stat. § 273.13, subd. 23 (i)(1) (2008); and

(2) if the Subject Property qualifies as agricultural, whether it also qualifies for Green Acres treatment under Minn. Stat. § 273.111 (2008).

Statutory Authority

Minnesota Statute Section 273.13, subd. 23 (e) (2008) provides:



Agricultural land as used in this section 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, cultivation, drying, or storage of agricultural products for sale, or the storage of machinery or equipment used in support of agricultural production by the same farm entity.

Minn. Stat. § 273.13, subd. 23 (e) (2008).



Minnesota Statute Section 273.13, subd. 23 (a) (2008) states:



An agricultural homestead consists of class 2a agricultural land that is homesteaded, along with any class 2b rural vacant land that is contiguous to the class 2a land under the same ownership.

Minn. Stat. § 273.13, subd. 23 (a) (2008).



Finally, under Minn. Stat. § 273.13, subd. 23 (c):



Class 2a agricultural land consists of parcels of property, or portions thereof that are agricultural land and buildings. ... Class 2a property may contain property that would otherwise be classified as 2b, including but not limited to sloughs, wooded wind shelters, acreage abutting ditches, and other similar land impractical for the assessor to value separately from the rest of the property.

Minn. Stat. § 273.13, subd. 23 (c) (2008).



Discussion

There are three contiguous parcels at issue, which comprise the Subject Property. Parcel 1 2 consists of 1.66 acres; Parcel 2 3 consists of 3.3 acres; and Parcel 3 4 has 9.76 acres. While it is undisputed that Parcel 1 and Parcel 2 are agricultural, the parties disagree about whether Parcel 3 is agricultural. Prior to the January 2009 assessment, the Subject Property had been classified as agricultural. Respondent changed the classification based upon the assessor's determination that it was not used for agricultural purposes during the assessment year. Petitioners contend that Parcel 3 was available as pasture land for the horses they raised during the assessment year regardless of whether or not it was used as such and, thus, should be considered as held for agricultural production. Further, Petitioners claim that the Subject Property should be restored to Green Acres treatment because it is primarily devoted to raising livestock for sale and not to any other non-agricultural use. For the reasons set forth below, we find that the Subject Property does not qualify for agricultural classification and, thus, cannot receive Green Acres treatment.



Petitioners first assert that the term “agricultural production” does not appear in Chapter 273. We agree and find that “agricultural land” is the operative term under Minn. Stat. § 273.13, subd. 23 (e) (2008), which defines “agricultural land” as:



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, cultivation, drying or storage of agricultural products for sale, or the storage of machinery or equipment used in support of agricultural production by the same farm entity. 5

Included among the list of qualified agricultural products that may be raised in this section is livestock. 6 Although not every square foot of property must be occupied by livestock in order to qualify as agricultural, we find no authority supporting Petitioners' position that so long as there is no other competing use for the property, the vacant land next to Petitioners' homestead must be classified as agricultural. Rather than eliminating other potential uses for the land as Petitioners contend, Minn. Stat. § 273.13, subd. 23 (e) addresses actual use of the property during the assessment year, stating that agricultural purposes “means the raising, cultivation, drying or storage of agricultural products for sale, or the storage of machinery or equipment used in support of agricultural production....”



Here, it is undisputed that Petitioners did not use the vacant land portion of Parcel 3 next to the homestead for pasturing their horses during the assessment year. Although the statutory language does not require that pasture land be fenced in to qualify as agricultural, it cannot be considered a grazing area when no livestock has used it as such during the preceding year. In fact, Petitioners state that “[t]he unfenced pasture constituting the north woods is available for pasture expansion if needed.” 7 This language suggests that the unfenced land was not being used for pasture at the relevant time. Moreover, Petitioner Harvey Jacobsen gave a statement to the Washington County Assessor in 2010, in which he admitted that, “[w]e stopped using the north woods and pasture simply because it wasn't needed any more. If ever a time would come when we have more horses in the summer than we have assessable [sic] woods and pasture for, we can easily open up the north woods and pasture.” 8 These statements submitted by Petitioners themselves indicate that the vacant land next to their homestead was not being used for pasturing the horses during the 2009 assessment year. In fact, Petitioners make no claim that they used the vacant land for pasturing in 2009.



Petitioners rely upon Brackey v. County of Washington 9 and Holt v. County of Chisago 10 as support for their position that the Subject Property should be classified as agricultural. In Brackey, however, the 17 acres of subject property that the taxpayer claimed to be a tree farm included trees in every area of the subject property except the 4-acre pond, and the taxpayer had consistently mowed, weeded, and sprayed the entire parcel, except the 4-acre pond so as to maintain it for agricultural use. Thus, we classified it as agricultural. Here, however, Petitioners did nothing special to the vacant land near their homestead to prepare or preserve it for pasturing their horses. Thus, this case is not only factually distinguishable from Brackey, but the Brackey holding is consistent with our finding that agricultural classification is inappropriate here.



The Holt case also fails to support Petitioners' claim. In that case, we held that the 10 acre factor was met because the owner at least tried to keep a sufficient quantity of land in agricultural production. Rather than simply withdrawing the land from agricultural use, as Petitioners did in this case, there was a significant crop failure during the year in question in Holt. However, since the taxpayer both before and after the crop failure attempted to keep at least 10 acres in agricultural production, we upheld the agricultural classification. Here, Petitioners did nothing to attempt to keep at least 10 acres in agricultural production during the 2009 assessment year.



Conclusion

It is undisputed that two of the three parcels comprising the Subject Property are agricultural. Together, these parcels total less than 5 acres. Therefore, whether the Subject Property should be classified as agricultural turns upon the third parcel, Parcel 3, comprised of 9.76 acres. Parcel 3 contains Petitioners' home on a one-acre site, as well as approximately two acres of wetlands classified as tax exempt, and the balance is woods and waste. The remaining 6.76 acres were not being used for agricultural production and were not used for pasture or for any other agricultural purpose.



Thus, we find that the requirement to qualify for agricultural classification and Green Acres treatment as of January 2, 2009, was not met. That is, ten or more contiguous acres of the Subject Property were not in agricultural production. Petitioners' Motion for Summary Judgment is hereby denied. Respondent's Motion for Summary Judgment is hereby granted.



S. A. R.



1



The Subject Property consists of three parcels. PID numbers are 07. 029.21.44.003 (Parcel 1, 9.95 acres); 07. 029.21.44.0002 (Parcel 2, 3,3 acres); and 07. 029.21.44.001 (Parcel 3, 1.66 acres).

2



PID No. 07. 029.21.44.0001.

3



PID No. 07. 029.21.44.0002.

4



PID No. 07. 029.21.44.0003.

5



Minn. Stat. § 273.13, subd. 23 (e) (2008).

6



Minn. Stat. § 273.13, subd. 23 (i)(1) (2008).

7



Petitioners' Memorandum in Support of Motion for Summary Judgment, p. 3.

8



Statement of Petitioner Harvey Jacobsen attached to and incorporated by reference in Affidavit of Harvey Jacobsen dated Oct. 5, 2010.

9



File No. C4-06-7837 (Minn. Tax Ct. May 6, 2008) Am. Findings (June 23, 2008).

10



File No. C5-04-5559 (Minn. Tax Ct. Mar. 2, 2005).