Opinion ID: 1676998
Heading Depth: 1
Heading Rank: 4

Heading: is the actual implementation of an irrigation system a proper factor to be considered in the assessment of agricultural lands?

Text: When reviewing a circuit court's decision after a de novo trial of an assessment matter, this Court's proper scope of review is to determine whether the circuit court's decision is clearly erroneous. Knodel, 269 N.W.2d at 389. In the present case, the circuit court concluded, inter alia, that irrigated land should not be separately classified but should be considered as dryland and assessed according to SDCL 10-6-33.1 and SDCL 10-6-33.2. After a review of the record, briefs, and arguments herein, together with the relevant statutes and cases, we are not left with a definite and firm conviction that a mistake has been committed. In re Estate of Hobelsberger, 85 S.D. 282, 289, 181 N.W.2d 455, 459 (1970). We therefore affirm the circuit court's decision herein. For taxation purposes, all property is classified as either agricultural or nonagricultural property, SDCL 10-6-31, and if two of three statutory criteria are met, land will be classified as agricultural land. SDCL 10-6-31.3. Under SDCL 10-6-33.1, the tax assessment valuation of agricultural land is to be based on the following factors: (1) The capacity of the land to produce agricultural products as defined in § 10-6-33.2; (2) Soil, terrain, and topographical condition of property; (3) The present market value of said property as agricultural land as determined by the factors contained in subdivisions (1), (2), (4) and (5) of this section; (4) The character of the area of place in which said property is located; and (5) Such other agricultural factors as may from time to time become applicable. SDCL 10-6-33.2 further provides: Capacity of land in agricultural use to produce agricultural products shall be based on average yields under natural conditions, in the case of land producing crops or plants, and on the average acres per animal unit, in the case of grazing land; said average shall affect each operating unit and shall be based on the ten-year period immediately preceding the tax year in issue. In determining such capacity to produce, the county director of equalization and/or the county board of equalization must take into consideration yields, and/or carrying capacity, as determined by the soil conservation service, the agricultural stabilization and conservation service, the extension service, federal land bank and private lending agencies dealing with land production capacities. Land is defined in SDCL 43-1-4 as the solid material of the earth, whatever may be the ingredients of which it is composed, whether soil, rock, or other substance. Butte County's valuation assessment procedures, however, went beyond assessing the earth's capacity, in and of itself, to produce agricultural products, for it attempted to assess the earth's capacity to produce according to the farming and crop nurturing systems actually implemented and employed by the individual landowner. Butte County attempted to establish a separate classification for irrigated land. This, we conclude, Butte County cannot do. There are approximately 68,000 acres of irrigated land in Butte County, South Dakota, and various methods are used to apply water on the land. These irrigation methods include ditch and gravity flow systems, center pivot sprinkling systems, underground and above-ground pipe sprinkling systems, subsoil irrigation systems, and spreader dams. These irrigation systems use numerous pieces of equipment such as electric and fuel-driven pumps and engines, sprinklers, gates, pipes, and hose. To the extent this equipment constitutes personal property, however, it is not subject to taxation, for personal property taxes were repealed in 1978. See 1978 S.D. Sess. Laws chs. 72 and 73. Additionally, the motor fuel and electricity used to power these pumps and engines is exempt from retail sales taxes. See SDCL 10-45-19 and SDCL 10-45-19.1. The landowners procure water for their irrigation systems from various sources. Most of the landowners receive their water from the Belle Fourche Irrigation District, but some of the landowners receive water from private irrigation associations, flowing streams, creeks, rivers, wells, and dams. Water for irrigation, however, is not always available. Many of the landowners have junior or secondary water rights and many times water will only be available for those with principal water rights. The availability of water and the variance of classes of water rights therefore greatly affects the efficiency and ability to irrigate from year to year. By implementing the irrigation tax assessment procedures here in question, Butte County has implanted within the assessment process, collateral factors and considerations subject to continuous variation. The statutory scheme embodied within SDCL 10-6-33.1 and SDCL 10-6-33.2, however, provides an objective method for assessing the value of agricultural lands based on constant and universal factors. The soil, terrain, topography, character of the area, market value, and the capacity of the earth to produce are to be examined and assessed appropriately. [2] These factors are applicable to all agricultural land and the statutory scheme provides an objective and uniform method for assessing value. The farming practices of the individual landowners are not to be considered when assessing the land's value. Farm management decisions cannot change the earth's value for taxation purposes. Mortenson v. Stanley County, 303 N.W.2d at 111. Likewise, a farm management decision to implement an irrigation system cannot change the earth's value for taxation purposes. Nor can we read SDCL 10-6-33.1 and SDCL 10-6-33.2 as permitting consideration of the actual implementation of an irrigation system. As a general rule, statutes which impose taxes are to be construed liberally in favor of the taxpayer and strictly against the taxing body. Nash Finch Co. v. South Dakota Dep't of Revenue, 312 N.W.2d 470, 472 (S.D.1981). When the legislature imposes a tax, it must do so in clear and express language with all ambiguity and doubt in the particular legislation being resolved against the one who seeks to impose the tax. Kearney & Trecker Corp. v. Wisconsin Dep't of Revenue, 91 Wis.2d 746, 753, 284 N.W.2d 61, 64 (1979). We therefore affirm the circuit court's determination that the actual implementation of an irrigation system is not a proper consideration and that irrigated land should not be separately classified. This does not mean, however, that the land's irrigability, whether actually irrigated or not, is not a relevant consideration when assessing agricultural land value. The irrigability of land enhances its value and this Court has so recognized. See Basin Elec. Power Coop., Inc. v. Cutler, 254 N.W.2d 143 (S.D.1977); and Nebraska Elec. Generation & Transmission Coop., Inc. v. Tinant, 90 S.D. 284, 241 N.W.2d 134 (1976). Thus, to the extent the land is irrigable, because of its location, soil, terrain, topography, and appurtenant and nontransferable water rights, see SDCL ch. 46-5, its value may be assessed appropriately. [3] However, to the extent irrigability is already considered in the market value analysis, soil survey, etc., it should not be separately reevaluated, for double taxation based on this single factor would result. Therefore, we reverse that part of the circuit court Judgment which determined that the land's irrigability is not a criteria for an increase in the valuation of agricultural land.
DID THE CIRCUIT COURT ERR IN ORDERING THE REASSESSMENT OF THE LANDOWNERS' AGRICULTURAL LANDS? South Dakota Constitution Article XI, § 2, provides in part: Taxes shall be uniform on all property of the same class, and shall be levied and collected for public purposes only. In an appeal to a circuit court on a tax assessment matter, the circuit court may give the taxpayer relief if the assessment lacks uniformity and is grossly inequitable without regard to the actual value or true and full value of the subject property. In re Robinson, 73 S.D. 580, 46 N.W.2d 908 (1951), rev'd on other grounds, 89 S.D. 651, 237 N.W.2d 665 (1975). See also, Knodel, 269 N.W.2d at 389. Additionally, failure to comply with statutory provisions regulating assessments renders the assessment void, and if the tax levied thereby is unjust and inequitable, the taxpayer may avail himself of such invalidity. Brink v. Dann, 33 S.D. 81, 101, 104, 144 N.W. 734, 736, 738 (1913). In the present case, as determined above, Butte County substantially failed to comply with the statutory provisions regulating assessments when it increased valuations because of the actual implementation of irrigation systems. Irrigated land, as such, cannot be separately classified. Perforce, the assessments of the landowners' property in this case, are therefore void. Because lands capable of irrigation, although not actually irrigated, were assessed at lower values, the landowners' tax assessments were inequitable. We therefore affirm the circuit court's decision requiring the reassessment of the landowners' agricultural lands consistent with this opinion. Accordingly, the Judgment appealed from is affirmed in part and reversed in part. ANDERSON, Circuit Judge, concurs. MORGAN, J., concurs specially. FOSHEIM, C.J., and WUEST, J., dissent. ANDERSON, Circuit Judge, sitting by appointment. SABERS, J., not having been a member of the Court at the time this action was submitted to the Court, did not participate.