The main question in these cases is the Petitioner’s claim for a change to agricultural land classification. The DLGF has been directed to establish rules for determining the true tax value of agricultural land. Ind. Code § 6-1.1-4-13(c). Agricultural land values are based on productivity, but only land actually “devoted to agricultural use” may be assessed as agricultural land. Ind. Code § 6-1.1-4-13(b). A taxpayer seeking to have its land assessed as agricultural cannot prevail merely by showing that agriculture is one of several activities for which it uses the land.
The Respondent had the burden
of proof for 2006 and the Petitioner had it for 2007-2010, but that distinction
does not change the outcome of the agricultural land classification issue because
the weight of the evidence for the entire period establishes that the subject property should have been assessed
based on agricultural land classification. The Board reaches this conclusion
for the following reasons:
...There is no dispute that the subject property consists of 96.14 acres. Aerial photographs show that it has a somewhat irregular shape with a house and barn located near one corner. A better view of the house and barn area is shown in two photographs, part of Respondent Exhibit A. There are few trees in the house and barn area, but it is a relatively small part of the entire property. The photographs also show a tractor, some other unidentified equipment, some fence, and large, round bales of something. These photographs support the purported agricultural use.
As part of his
federal income tax returns, the Petitioner filed Schedule F, Profit or Loss
From Farming, for 2007, 2008, 2009, and 2010. These documents state that the
main product is “livestock.” The Respondent focused on the minimal farm income
and the net losses shown on these schedules as an important indication that the
subject property was not devoted to agricultural use. But the Respondents’
point has little significance because the record contains no evidence that the
subject property was used for anything else. By itself, the fact that the
Petitioner gets very little income from farming and operates at a loss does
little, if anything, to prove that the subject property is not devoted to
agricultural use.
The aerial
photographs also show that much of the subject property has a significant
amount of trees, but nothing establishes exactly how much. (Some testimony
indicated half of the subject property is wooded.)
The Petitioner
harvested pine needles from 2006 through 2008 and sold them to a pulp factory.
(The Respondent elicited this testimony from Mr. Smith.)
The Petitioner
admitted there is no timber management plan for the subject property and it is
not a registered forest. While the existence of either factor is a significant
indication that such land is devoted to an agricultural use, the lack of a
timber management plan or registered forest status does not necessarily
preclude it.
The
Petitioner’s email to Mr. Smith provides more background and detail about the
use of the subject property. If those statements had been offered as actual
testimony from Mr. Fiene at the hearing, the Board’s determination would be
much easier. Unfortunately, Mr. Smith chose to rely on the email, which clearly
is hearsay. The fact that the Respondent allowed the email to be admitted to
the record as Petitioner Exhibit 7 without an objection and then much later in
the hearing asserted a hearsay objection complicates our analysis. Much of the
problem with hearsay evidence relates to it being less reliable and less
credible than non-hearsay evidence. If there was substantial evidence in the
record that contradicted the statements in the email, the email would almost
certainly have less weight. But here the Respondent made no attempt to disprove
any of the statements in the email. In fact, although they focus on
different points and draw different conclusions, the facts about the subject
property as presented by both sides are entirely consistent. Even though it is
hearsay, under these circumstances the Board will not entirely disregard
the statements in the email. Accordingly, the following points provide
additional support for the agricultural land classification.
In 1992 the Petitioner purchased the subject property for a
small farm. He and his father built the home in 1996-1998. The barn was built
approximately a year later.
Most of the wooded area has an upper canopy of scotch pine.
Along the creek there is 15-20 acres of traditional native forest. The scotch
pines were planted in the 1930s and are nearing the typical life-span. The
state forester said they will not propagate and will eventually die off. Scotch
pine is not considered good for lumber and is just used for pulp. The
Petitioner purchased tractors and other equipment. For a few years he harvested
the pines and sold them to Seymour Pulp Wood, but eventually that pulp
operation closed. Subsequently, most of the logging equipment has been sold or
scrapped, although the Petitioner converted the feller-buncher to a large round
hay bale mover to aid in feeding the goats.
It is going to take another 10-15 years for most of the
native hardwood trees to achieve marketable size.
The Petitioner began learning how to raise goats by buying
a few wethers in the spring and raising them to slaughter in the fall. In about
2007, the Petitioner purchased breeding stock of Myotonic (fainting) goats to
raise for meat. He started with 5 goats. Now he has 35. The wethers still are
sold for meat.
The goats help significantly with maintenance of the woods.
They keep vines and underbrush under control. In addition, during the winter
they occasionally eat the pine needles and newer bark.
Currently
about 25 acres is fenced for the goats. The Petitioner has been adding fencing
over time to increase the area for the growing goat herd. When it is done,
south of the creek there will be 70+ acres fenced for the goats.
Again, it is
significant that the Respondent proved no other use of the property. Merely
relying on the lack of income, the lack of current logging operations, lack of
other crops, the lack of a timber management plan, and not being a registered
forest does not nullify the evidence about raising the goats, harvesting and
selling trees for pulp, using the pines to feed the goats, and growing hardwood
trees that will be marketable in 10 or 15 years. The record contains adequate
support for changing to an agricultural land classification.
In addition to
the agricultural land classification, the Petitioner claimed the woodland
should get a negative 80% influence factor. The record, however, does not
establish how much of the land might satisfy the applicable requirements for
woodland. The property record cards show the land divided into 3 segments
consisting of 1 acre, 19 acres, and 76.14 acres, but none of the information
relates to agricultural land classification or woodland classification. Mr.
Smith made only a few conclusory statements about the negative influence factor
for woodlands, but they do not provide a substantial basis for attributing any
specific acreage or dollar amount as woodland, even if some of the land might
qualify. And except to the extent the Respondent tried to establish that the
subject property is not agricultural land, the Respondent completely ignored
the woodlands negative influence factor.
Neither party
offered any evidence or argument about what the assessed values actually should
be when they are based on agricultural land classification. As a result, the
Board can only determine that the Respondent must recalculate the assessed
values for the subject property for 2006-2010 based on agricultural land
classification.
Because the
evidence is sufficient to prove the subject property should be assessed as
agricultural land, the Respondent’s attempt to prove a value based on the
selling prices of comparable properties is not relevant.
