MARALGATE, L.L.C., APPELLEE, v. GREENE COUNTY BOARD OF REVISION ET AL., APPELLANTS.
No. 2010-1769
Supreme Court of Ohio
Submitted October 18, 2011—Decided October 26, 2011.
130 Ohio St.3d 316, 2011-Ohio-5448
{11} This is an appeal by the Greene County auditor and the Greene County Board of Revision (“BOR“) from a decision of the Board of Tax Appeals (“BTA“) that reversed the decision of the BOR and granted current-agricultural-use-valuation (“CAUV“) status to a 70.959-acre parcel owned by Maralgate, L.L.C. The parcel was purchased by the Turner Family Partnership as part of a 749-acre farm in March 2005. Apparently, the entire farm enjoyed CAUV status until the parcel at issue was transferred from the family partnership to the Maralgate entity on July 28, 2006. Thereafter, the Greene County auditor denied the CAUV application for tax year 2007, and Maralgate filed a complaint with the BOR, which held a hearing and denied the application. Maralgate then filed an appeal to the BTA, which held a hearing of its own and issued a decision reversing the BOR and granting the CAUV status. The county has appealed.
{12} Central to all the county‘s arguments is its contention that because of the transfer of the one parcel from Turner Family Partnership to Maralgate, the tax status of that parcel had to be determined in isolation, without regard to the use of adjacent parcels still directly owned by the partnership. Because almost 60 percent of the parcel has trees that are not grown for commercial purposes, the most important consideration is whether the parcel was, for purposes of
{13} We hold that the parcel was under common ownership with the rest of the farm. Guided by that central holding, we reject two additional arguments advanced by the county. First, contrary to the county‘s assertion, the phrase “growth of timber for a noncommercial purpose” in
{14} Because we reject the arguments advanced by the appellants, we affirm the decision of the BTA.
I. Facts
{15} In March 2005, the Turner Family Partnership acquired a 749-acre farm consisting of more than one parcel in a single transaction. One component of that farm was the 70.959-acre parcel that is at issue. In July 2006, the partnership assigned that parcel to Maralgate, L.L.C., in order to limit liability in case of a drowning in one of the quarry ponds on the property.
{17} Maralgate appealed to the BTA, which held a hearing on October 15, 2009. At that hearing, Maralgate offered the testimony of Albert J. Turner III, a principal and the general partner of the Turner Family Partnership.
{18} Turner testified that the partnership acquired the “Noble Farm,” a 749-acre tract that included the property at issue, through auction in February 2005. In July 2006, the partnership transferred the parcel to Maralgate for liability reasons relating to the ponds. Maralgate is a single-member limited-liability company wholly owned by the Turner Family Partnership.
{19} Turner himself farmed the larger farm, including the parcel at issue, and testified that the cultivation involved the field crops soybeans and corn. Turner stated that there were about 20 acres of “agricultural land” on the parcel. But he amended that testimony to 19.7310 based on reviewing the property record card, which sets forth “tillable,” “woodland,” and “right of way” acreage. As for the portion of the parcel actually under cultivation, approximately 2.2 acres were farmed in the northwest corner of the parcel, and Turner‘s testimony indicated (with very little precision) that additional land in the eastern and southeastern part of the parcel had been cleared and farmed. Turner additionally testified that the parcel generated at least $2,500 per year.
{110} The record does not contain Maralgate‘s 2007 CAUV application, but at the BOR hearing, the auditor explained her grounds for denying the preferred tax status: “[Y]ou have to [actually farm] at least 25 percent [of the parcel] * * * and you are not meeting the 25 percent for farming purposes” as to the parcel. As for the integration of the parcel into the whole 749-acre farm, the auditor stated her position that “[e]ven though it‘s owned by the same family it‘s not the same name” and that as a result of the partnership having “transferred it into an LLC,” the parcel‘s tax status must be determined in isolation from the remainder of the farm. The BOR denied Maralgate‘s complaint on the grounds of “no documentation provided and no proof of income.”
{111} After Maralgate appealed to the BTA, the board held a hearing at which it reviewed an aerial photograph of the parcel and heard testimony of Turner. The BTA issued its decision on September 21, 2010.1 The BTA first found that
{112} The BOR and the auditor have appealed, and we now affirm.
II. Analysis
{113} By a 1973 amendment to the state Constitution, Ohio voters authorized the General Assembly to depart from uniformity in valuing real property by permitting farms to be valued in accordance with their current agricultural use rather than their market value.
{114} The implementing legislation is set forth at
A. The parcel is under “common ownership” with the 749-acre Turner family farm because the family partnership owns Maralgate
{115} Under
{116} Three uses of property described in division (A)(1) occurred on the parcel. First, field crops were cultivated on approximately three acres in the northwest corner of the parcel and an indeterminate portion in the south and east of the parcel. Second, a portion of the parcel is covered with ponds that are vestiges of earlier quarrying conducted on the parcel, while another portion is devoted to a landfill that the owner permits the county to use without charge.
{117} Third and most significantly, more than 40 of the 70 acres of the parcel were wooded, but the trees were not cultivated as a crop. Thus, the stand of trees covered some 57 percent of the parcel, and its presence raises the question whether the parcel constitutes land “contiguous to or part of a parcel of land under common ownership that is otherwise devoted exclusively to agricultural use” for purposes of
{118} The county contends that the parcel cannot be treated as part of the larger farm under
{119} As noted, the relevant statutory language is in
{120} The county argues that the tax commissioner‘s rule, which requires the same entity to be listed as owner of the different parcels, controls the scope of “common ownership” under
{121} It is elemental that an administrative rule such as
{122}
{123} Nonetheless, we do not read
{124} Specifically, the text that is currently the tax commissioner‘s rule at
{125} Meanwhile, the General Assembly amended
{126} Because the rule was promulgated long before the statutory language at issue was enacted, we do not view the rule as an administrative construction of that language. Moreover, a rule that would require the same entity to be the owner of two parcels is arguably inconsistent with the statutory requirement that land be under “common ownership,” as already indicated. Simply put, the latter term indicates that once the information is in their possession, the taxing authorities should look behind the person or entity named on a deed to determine the ultimate ownership of two properties.
{127} For the foregoing reasons, we reject the county‘s contention that
B. R.C. 5713.30(A)(1) explicitly allows the tax preference for noncommercial timber based on contiguity and common ownership
{128} The county argues that noncommercial timber under
{129} This sequence of amendments shows that the General Assembly intended to permit the tax break to apply to the wooded portions of a farm even if the timber in those areas was not harvested as a crop. The county‘s citation of Rocky Fork Hunt & Country Club v. Testa (1995), 100 Ohio App.3d 570, 654 N.E.2d 429, is unavailing. In that case, the parties disputed whether the wooded portion of a parcel was devoted exclusively to agricultural use in 1992, before the 1993 amendments that permitted noncommercial timber to qualify for the tax preference. Thus, the Tenth District‘s decision simply did not address the provision of law at issue here, because it was not in effect at the time at issue in that case.
{130}
{131} The county argues that the tax preference must be granted on an acre-by-acre basis and that the owner has the burden to demonstrate by land survey precisely which portions of any particular parcel are subject to agricultural use as defined. In support, the county cites Renner, 59 Ohio St.3d 142, 572 N.E.2d 56.
{132} In both Renner and the later case, Furbay v. Tuscarawas Cty. Bd. of Revision (1991), 61 Ohio St.3d 64, 572 N.E.2d 660, land that had previously qualified for CAUV treatment was subject to a conversion, i.e., a loss of CAUV status, pursuant to
{133} The court held that an owner may reduce the amount of recoupment by proving that a portion of the land continued to enjoy CAUV status. But the court placed the burden firmly on the owner to demonstrate, by land survey if necessary, the precise area devoted to agricultural and nonagricultural use. Absent such proof, the recoupment must equal the tax savings that relate to the entire parcel.
{134} In this case, the BTA correctly concluded that Renner and Furbay are not apposite. What was different in Renner and Furbay was the existence of a new commercial use of the property that was not agricultural. Simply put, Renner and Furbay underscore the proposition that when a portion of a parcel of real estate is used for a commercial purpose that is not agricultural, the parcel itself cannot be said to be “devoted exclusively to agricultural use.” It follows that if an owner nonetheless desires to qualify some portion of the parcel that is still subject to the agricultural use, the owner must show precisely what acreage is agricultural and what acreage is subject to the other commercial use. But as the BTA stated, the doctrine of Renner and Furbay does not apply here, because there is no commercial use other than the agricultural. BTA No. 2008-M-644, at 7 (the noncommercial uses of the parcel did not involve “economic units” that had to be excluded from CAUV status).
{136} We disagree. The administrative rule expressly creates a one-acre carve-out for the farm home but remains silent on other uses incidental to agricultural use. Contrary to the county‘s reasoning, we construe the rule‘s silence on other uses—such as the vestigial quarry ponds and the county‘s permissive and noncommercial use of a corner of the parcel as a landfill—as not requiring a carve-out. The conditions are merely that such uses be purely incidental to the overall agricultural use and that they not be commercial in nature.
{137} In sum, the present case involves a 749-acre farm consisting of contiguous parcels and, with respect to the parcel at issue, only one commercial use—the growing of field crops, which is agricultural under
{138} Under all these circumstances, we conclude that the BTA acted reasonably and lawfully when it granted CAUV status to the entire parcel. We therefore affirm the BTA‘s decision.
Conclusion
{139} For the reasons set forth, the decision of the BTA is reasonable and lawful. We therefore affirm it.
Decision affirmed.
O‘CONNOR, C.J., and PFEIFER, LUNDBERG STRATTON, O‘DONNELL, LANZINGER, CUPP, and MCGEE BROWN, JJ., concur.
James R. Gorry, for appellants.