REQUEST LETTER

01-008

Response March 20, 2001

Dear Mr. Chapman:

As per our telephone conversation, I am writing to make a request for an advisory opinion regarding the application of the Farmland Assessment Act and the designation of “greenbelt” as it would pertain to a theoretical situation.

The specific theoretical situation for you to evaluate would be as follows: there is a family farm of approximately 80 acres. One brother decides to take his portion and subdivides it to give to his children for an inheritance. In order to do this he files a subdivision plat and subdivides 25 acres into five lots of at least five acres in size or larger. He is required to put in an asphalt road as part of the county subdivision requirements. The question is, based on Utah Code Annotated 59-2-504, does this property have to now be taken out of greenbelt and the roll back taxes paid because (2) “its platted with surface improvements in place that are not an integral part of agricultural use” and (4) “for purposes of this section ‘platted with surface improvements in place’ means any of the following subdivision improvements are in place: curb, gutter or pavement.”

In this particular situation bear in mind that farming, as has been done for the previous 30 years, has been continuous. The only change to the property has been the recording of the subdivision plat and the construction of an asphalt road.

Your explanation particularly as to the definition as to what it means to be or not be “an integral part of agriculture,” would be of specific importance.

Your help in this matter would be greatly appreciated. If you have any questions or concerns regarding this request, please give me a call at your convenience.

Sincerely,

NAME

TITLE

RESPONSE LETTER

March 20, 2001

NAME

RE: Advisory Opinion – Farmland Assessment Act

Dear Mr. NAME,

We have received your request for an advisory opinion concerning land that is used for agricultural purposes, yet is platted as a subdivision as addressed under Utah Code Ann. §59-2-504. You inquire whether such land can be assessed under the Farmland Assessment Act (“FAA”) on its agricultural use value, instead of its highest or best use, i.e. market, value. While we shall not rule on the specific circumstances you describe because of an ongoing appeal concerning land with similar characteristics, we will discuss our interpretation of Section 504 and describe under what circumstances land would still qualify for agricultural use valuation even though it meets the Section 504 criteria.

For land to be assessed on its agricultural use value, it must satisfy the minimum qualifying requirements of Utah Code Ann. §59-2-503. Even so, land qualifying under Section 503 must still be assessed on its market value if certain conditions exist under Utah Code Ann. §59-2-504. This section provides that “[l]and shall not be classified as agricultural land actively devoted to agricultural use if the land is:”

(1) part of a platted subdivision or planned unit development, with restrictions prohibiting its use for agricultural purposes with surface improvements in place, whether within or without a city;

(2) platted with surface improvements in place that are not an integral part of agricultural use; or

(3) if land has been platted with surface improvements in place, and if the land has been removed from the farmland assessment rolls, and if the owner is not able to transfer title to the platted property, or continue development of the platted property due to economic circumstances, or some other reasonable cause, the owner may petition the county assessor for reinstatement under the farmland assessment act for assessment purposes as land in agricultural use without vacating the subdivision plat. The county assessor may grant the petition for reinstatement if the land meets all other agricultural production requirements under this section.

(4) For purposes of this section, “platted with surface improvements in place” means any of the following surface improvements are in place: curb, gutter, or pavement.

Upon first impression, it appears that land meeting the criteria of either Subsection 504(1) or 504(2) would automatically be disqualified from agricultural use valuation. However, further analysis of the FAA and Subsection 504(3) suggests otherwise. The FAA was created in 1969 to encourage agricultural landowners not to convert their land to residential or other commercial use. In 1992, Section 504 was amended to provide that land eligible for agricultural use valuation would be disqualified should an owner take certain steps to convert it to a non-agricultural use. Nevertheless, in Subsection 504(3), the Legislature specifically provides that platted land with surface improvements in place may, under certain circumstances, still be assessed on its agricultural use value. These circumstances include the owner not being able to transfer title to the platted property or being able to continue development of the land due to economic circumstances or some other reasonable cause.

When considering the entirety of Section 504, we determine that where agricultural land is platted with surface improvements in place, there is a rebuttable presumption that the owner has taken steps to convert it to a non-agricultural use. Accordingly, such land is disqualified from agricultural use valuation unless there is evidence that the land will actually not be converted to another use; i.e., the land will continue to be used for agricultural purposes. For example, if an owner has historically used and still plans to use the land for agricultural purposes and there is no evidence that the owner plans to use the land otherwise in the foreseeable future, it is evident that the owner has chosen to retain the land in its agricultural use. In effect, the owner is “unable to continue development due to . . . some other reasonable cause,” that is, his decision to continue the agricultural use of his land. Thus, under Subsection 504(3), the Assessor is authorized to reinstate the property as agricultural land, if, as here, the other requirements are met. (Although Subsection 504(3) on its face applies only where land has been removed from the farmland assessment rolls, we believe it should not be so narrowly construed. If the land owner meets the criteria for having property reinstated under Subsection 504(3), those same criteria are appropriate to preserve farmland assessment in the first instance.) For these reasons, where we determine that sufficient evidence exists to show that the land will continue to be used for agricultural purposes, the Tax Commission would find that the land would continue to qualify for assessment on its agricultural use value.

We point out that this opinion addresses the Tax Commission’s interpretation of Section 504 and does not address any specific matter currently under appeal. While it may provide you guidance when addressing the specific circumstances you describe, this opinion does not affect any taxpayer’s right to a hearing before the Tax Commission on the same or similar facts. Please contact us if you have any other questions.

For the Commission,

Marc B. Johnson

Commissioner

MBJ/KC

01-008