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State ex rel. Peter Odgen Family Trust of 2008 v. Board of Review for Town of Delafield

Supreme Court of Wisconsin

March 14, 2019

State of Wisconsin ex rel. The Peter Odgen Family Trust of 2008 and The Therese A. Mahoney-Ogden Family Trust of 2008, Petitioners-Appellants,
v.
Board of Review for the Town of Delafield, Respondent-Respondent-Petitioner.

         REVIEW OF DECISION OF THE COURT OF APPEALS Reported at 381 Wis.2d 161, 911 N.W.2d 653');">911 N.W.2d 653 PDC No: 2018 WI APP 26

          Oral argument: November 5, 2 018

          Circuit Court Waukesha county No. 2016CV1707 Kathryn W. Foster Judge

          For the respondent-respondent-petitioner, there were briefs filed by R. Valjon Anderson, and Municipal Law & Litigation Group, S.C., Waukesha. There was an oral argument by R. Valjon Anderson.

          For the petitioners-appellants, there was a brief filed by Paul W. Zimmer, and O'Neil, Cannon, Hollman, DeJong & Laing S.C., Milwaukee. There was an oral argument by Paul W. Zimmer.

          An amicus curiae brief was filed on behalf of Wisconsin Realtors Association, Wisconsin Builders Association, and NAIOP-WI by Thomas D. Larson, Madison.

          An amicus curia brief was filed on behalf of Wisconsin Farm Bureau Federation, Cooperative and Waukesha County Farm Bureau by H. Dale Peterson, John H Laubmeier, and Stroud, Willink & Howard, LLC, Madison.

          SHIRLEY S. ABRAHAMSON, J.

         ¶1 In 2016, the Board of Review for the Town of Delafield reclassified two lots of land owned by The Peter Ogden Family Trust of 2008 and The Therese A. Mahoney-Ogden Family Trust of 2008 from "agricultural land" to "residential." This reclassification resulted in a significant increase in property tax owed for the two lots. The Board believed that to qualify for the "agricultural land" classification, the land must be farmed for a business purpose.[1]

         ¶2 The Ogdens sought certiorari review, and the Circuit Court for Waukesha County, Kathryn W. Foster, Judge, sustained the Board's reclassification of the land as "residential."

         ¶3 The court of appeals reversed the circuit court, holding that a business purpose was not necessary for land to be classified as "agricultural land" for property tax purposes.[2]"Because the assessor's determination of the appropriate classification was driven by his erroneous understanding of the law[, ]" the court of appeals ordered the circuit court to remand the cause to the Board to "assess the Trust property anew in a manner that is not inconsistent with" the court of appeals' decision.[3]

         ¶4 We affirm the decision of the court of appeals.

         ¶5 We agree with the court of appeals that a business purpose is not required in order for land to be classified as "agricultural land" for property tax purposes.

         ¶6 Based on the undisputed evidence presented to the Board, [4] the two lots at issue are entitled to be classified as "agricultural land" as a matter of law.

         ¶7 Accordingly, we remand the cause to the Board for the limited purpose of affixing a value to the two lots that we conclude are entitled to be classified as "agricultural land." I

         ¶8 The Ogdens own three adjacent lots of land in the Town of Delafield. Only two of those lots are at issue in the instant case.[5] The smaller of the two lots is 4.6 acres, and the larger of the two is 7.76 acres.

         ¶9 From 2012 through 2015, the two lots were classified as "agricultural land" and "agricultural forest land."[6] When the two lots were classified as "agricultural land" in 2015, the assessed value of the lots was $17, 100. In 2016, however, tax assessor Judson Schultz reclassified the two lots as "residential." When classified as "residential," the assessed value of the lots jumped to $886, 000. Thus, the reclassification of the two lots from "agricultural land" to "residential" resulted in a significant increase in property tax owed by the Ogdens for the two lots. The Ogdens filed an objection to the Assessor's reclassification with the Board, and an evidentiary hearing was held.

         ¶10 At the hearing, the Ogdens maintained that the two lots should continue to be classified as "agricultural land." Peter Ogden testified that the two lots were primarily used to harvest apples and hay for food and fiber and to grow Christmas trees. He explained that he grew apple trees on approximately one acre of the smaller lot. On the larger lot, Mr. Ogden testified that he grew Christmas trees on approximately four to five acres. He testified that the larger lot also contains a three-acre hayfield. Mr. Ogden testified that a barn was built on the smaller lot and presented a Certified Survey Map that showed a second proposed barn on the larger lot. Mr. Ogden concluded his testimony as follows:

In conclusion, growing apple trees, Christmas trees and alfalfa, which is what I am doing on these two pieces of land, should all be considered an agricultural use as long as that is the primary use of that land. As long as that is the primary use of that land. That is the primary use of that land.

         ¶11 Mr. Ogden presented aerial photographs of the two lots that showed the progression of the lots dating back to 2005. The 2013 picture shows a green hayfield, and the 2015 picture shows lines in the hayfield from when the hay was harvested. Mr. Ogden also presented ground photographs of the two lots. The pictures show apple trees and Christmas trees, each planted in orderly rows and individually staked out.[7] The ground photographs also included several photographs of the pre- and post-harvest hayfield. Mr. Ogden further presented over 100 pages of expense reports, invoices, receipts, equipment rental agreements, and checks showing the Ogdens' farming expenses for the years 2011 through 2016.[8]

         ¶12 The Ogdens called a local farmer, Lloyd Williams, as a witness. Mr. Williams testified that he and Mr. Ogden have "farmed [the lots] since 2012. We have plowed it. We tilled it. . . . And if Mr. Ogden gets cattle some day, we will hopefully work out a shared agreement where we can continue to do this in the future." Mr. Williams testified on cross-examination that he "[a]bsolutely, without a doubt" planted hay in the Ogden's hayfield. He elaborated that the Ogden's land had "extremely good soil" and that the Ogdens "fertilize it properly." Mr. Williams explained that the three-acre hayfield "produces 150 bales per acre," totaling approximately 450 bales of hay from the entire field. Mr. Williams also reaffirmed statements he made in a letter to Mr. Ogden dated three days before the hearing. The letter was admitted into evidence at the hearing and stated: "In 2012, we seeded alfalfa and brome grass and used it for cattle feed. We have established a beautiful hay field that we have continually harvested every year. We will again be harvesting the hay crop in 2016 . . . ."

         ¶13 The Assessor also testified before the Board. The Assessor explained the basis for his determination that the two lots were no longer entitled to the "agricultural land" classification:

Now, the issue is that the Ogdens may say well, they have a tree orchard and they are doing it for ag use. I can't really substantiate . . . whether [Ms. Mahoney-Ogden] is doing it for personal or she is doing it for actual agricultural economic benefit, I can't determine that. And that is why I am seeking and have asked for all of this documentation because-and the same goes for the trees, the Christmas tree farm.
Now, I am, okay, looking at this and going, okay, does the property taxpayer carry on an activity like a business. Because that is what ag use is about. Ag use is really for farmers; right? It is about farming.
And so, given that the physical evidence for me was difficult to substantiate[9], I went to documentation. And I mean, if you are going to be in ag use, I think you should be held to the same standards as the farmers are held to. And I am sure that [Mr. Williams] files ... a Schedule F profit and loss. And I mean if I were running a business, I would.
[T]here should be a relationship between [Mr. Ogden and Mr. Williams] because they're [sic] supposed to be a transaction going on, per the contract. So, there is just a bad feeling that I got. You know, this is actually being done because there is no doubt, okay, there is a significant tax benefit that is going on for [the Ogdens] to be able to get the ag use. ... I guess I was just looking for things to be much more clear-cut, everything flowing through because [Mr. Ogden] had set up this tree farm account. ... I went through and I looked at the receipts and I tabulated the number of trees that the receipts were in there for. And I mean, again, and if you are doing ag use, you're doing this to generate an income. . . . Well, if you are going to be in ag use, you're going to be in business and you better be on top of it. I have my own business. ... I expected as a business person as somebody in ag use to be on top of it.
And when I looked at the documentation, I just did not get a good feeling. Me professionally that if somebody looked behind me that they would look at this and they would question whether this tree farm was being done actually for agricultural reasons, to generate a profit for business, or was it being done to obtain significant property tax savings.
You know, unfortunately, the ag use program you would think it was really developed for the farmers. In reality there are so many loop holes that people can take advantage. If you truly knew what went on, you would shake your head. . . . And I have called into question things that, I guess, I felt professionally that I was obligated to do. With that, in summary, I just am going to go back to ag use is for farmers. Ag use is for business. Okay. If you want to get into it, okay, then you need to show that you are going to actually be doing a business. . . . So, all things to me just do not seem to be a business. It seems to be an effort to make it look like a business.
And I am-I want to make sure that if somebody looks behind me, that I am coming up with the right judgment on a situation. And I gave the, you know, Ogden the benefit of the doubt because I let them in the ag program. And understand somebody chooses to be in the ag program. I don't force anybody. That is their choice. I inform them of the consequences. I inform them especially if they are taking residential land and putting it in ag use that I am going to watch you closely because I know what the significant tax benefits are. You dot your T's, you cross your things, there is nothing that I can do. Developers do it all of the time. Okay. Farmers do it all of the time with residential land for individuals. And there is nothing that I can do as long as they do it correctly. The Ogdens simply didn't do it correctly. I am calling them. I can't again dispute that they have planting [sic] things, but I do not think it's for ag use. I do not think it's for business reasons.

         ¶14 On cross-examination, the Assessor admitted that he knew there were individually "staked out" apple and Christmas trees planted "in clean rows" on the two lots. Nonetheless, after doing some "soul searching," the Assessor concluded that he did "not believe based on the documentation . . . that this is ag use land."

         ¶15 In sum, the Assessor believed that he could not conclusively determine whether the two lots were devoted primarily to agricultural use based on physical evidence of farming. He then asked the Ogdens for documentation that might support an "agricultural land" classification for the two lots, but because the documentation, in his view, did not sufficiently show that the Ogdens "carr[ied] on [the] activity like a business," the Assessor concluded that the two lots were not entitled to be classified as "agricultural land."

         ¶16 During deliberations, Board member Edward Kranick expressed that he had

[not] seen where it's necessary to really have a business in all of these exhibits and in the guide for the board of review. I have just seen that it's a use, that it has to be devoted primarily to agricultural use, and that it's being used in a way for agricultural use.
[T]here is-Christmas-there are trees that are planted in a systemic [sic] way that appears to be in the use to be used eventually once they mature to be farmed and that the [hay is] being taken off and that there are orchards. That is what I am hearing. If I am not hearing that or if that is not what other people are hearing, please correct me or enlighten me.

         ¶17 The chairman of the Board, Paul Kanter, engaged in the following exchange with counsel for the Board:

[Kanter]: As to farming, you would agree that it's [sic] intent here is to protect a business concern, not horticulture as our ordinance defines horticulture ....
[Counsel]: There does need-Actually in the assessor's manual it makes [a] distinction between gardens and actual crop production. There does have to be some kind of a commercial interest in order for it to be separate from a personal garden where you're using it yourself. You need to have some interest in actually selling the product.

         ¶18 Board member Larry Krause stated that, in his view, the two lots do "meet the definition, very loose definition, of agricultural land." But, Mr. Krause added that "we are bound to take the word of ...


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