Court Opinion

ID: 9674913
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:37:15.913092+00
Date Added: 2024-06-11T18:16:30.177223
License: Public Domain

WINTERSHEIMER, Justice.
This appeal is from a judgment entered October 27, 1982, determining that the method of assessment by the Fayette County Property Valuation Administrator for agricultural and horticultural land was unconstitutional. The circuit court also held KRS 132.010(9), 132.010(10) and 132.-450(2)(a) unconstitutional.
The issues presented are whether the circuit court erred when it held the method of assessment to be unconstitutional, whether it erred when it found that the Department of Revenue had failed to equalize the assessments of agricultural and horticultural property, whether the statutes were unconstitutional, and whether it was error to allow the use of the 1980 assessments instead of the 1981 valuations for the tax year of 1981.
The method employed by the Fa-yette County PVA in assessing agricultural lands did not achieve the result required by Section 172A of the Kentucky Constitution in that it did not result in an equal tax burden. This constitutional provision was adopted in 1969 in order to remove agricultural land from the fair-cash value standard required by Section 172 of the Constitution. Section 172A provides a standard of assessment of the value of agricultural land in the same manner that Section 172 provides a standard for other taxable property. This Court has previously properly required that the fair cash value standards be applied uniformly. Parrent v. Fannin, Ky., 616 S.W.2d 501 (1981). This Court indicated that the uniformity required is not a uniformity of value but is one related to the standard of assessment. Section 172 of the Constitution is subject to the same requirements of uniformity as Section 172A because both are constitutional provisions for assessing property.
Sections 171, 172 and 172A of the Constitution are to be interpreted together. There is a violation of constitutional rights if the effective tax rate is not uniform and thereby results in an unequal tax burden. Any method of assessment which fails to follow the constitutional directions and accordingly does not produce an assessed value based on agricultural use of each individual parcel, violates the constitution. There can be no mass production method or formula to achieve a quick result. The income producing capacity of land is not the only factor to be considered in establishing the value of the property. See Kentucky Board of Tax Appeals v. Gess, Ky., 534 S.W.2d 247 (1976).
*687Although property valuation administrators throughout the state do not need to use the same method of arriving at an assessment, whatever method is used must result in a uniform standard of assessment whether the property is agricultural or residential. Section 174 of the Kentucky Constitution says that all property shall be taxed in proportion to its value.
A careful examination of the record indicates that the method used by the Fa-yette County PYA for 1981 resulted in farm property being assigned a value based on general averages rather than an individual and specific value related to the agricultural purpose for which it was used.
A review of the evidence indicates that the deputy valuators did not physically inspect the land but merely looked at the farm for a comparison with the contour maps in the PVA office. Evidently, the classes of value were assigned on a rotation basis for which there is no supporting document or schedule. The testimony of the PVA indicates that he relied solely on what he considered to be the income producing capacity of the acreage.
The use of mathematical formula to arrive at a result may be proper as long as the procedure adopted does not produce an unfair or unequal valuation. Here the formula was applied mechanically and failed to consider the particular individual characteristics of specific farm property. The appellants’ citation to Borders v. Cain, Ky., 252 S.W.2d 903 (1952), is not persuasive. The method used here, even though it was the same method used for all agricultural land in the county, was improper because it failed to value the property on the basis of uniform standards and did not result in an effective tax which was equally burdensome on all farm taxpayers.
The method used by the PVA could be valid as to individual properties only if it were adjusted to take into account the specific characteristic of each farm. The PVA made no effort to identify the different types of land or soil comprised in each individual farm so as to produce a more accurate assessment of the true value. No such individual adjustments were ever made.
There is evidence of probative value in the record that the soil capabilities and slope of the land are important in determining the income producing capacity of the land and that no one type of soil is limited to any one sector of the county.
As observed in Gess, supra, the process of assessing property is not easy, but difficulty cannot serve as a justification for deviating from constitutional requirements. The method used by the PVA was not constitutionally sound.
Turning now to KRS 132.010(9) and (10)and KRS 132.450(2)(a), we are of the opinion these sections of the statute do not violate the Constitution of Kentucky. Dwelling houses are to be assessed at fair cash value, and the income and acreage standards to qualify for “agricultural land” or “horticultural land” are not unreasonable.
KRS 132.010(9) excludes “residences” from the definition of “income-producing improvements.” But “residences” thus excluded have the narrow statutory definition given to the term “residential unit” in KRS 132.010(14). “Residential unit” is defined in KRS 132.010(14) as “all or that part of real property occupied as a permanent residence of the owner.” So defined it follows that housing located on farm property occupied by a nonowner and used in income producing activity of the farm as dwellings for tenant farmers and farm workers is not a “residential unit.” Such dwellings are “income-producing improvements” and a part of the agricultural land for ad valorem assessment purposes.
The circuit court properly determined that the correct remedy was the use of the 1980 assessments for the subject property for the tax year 1981. The circuit judge determined that the assessment for the year 1981 was unconstitutional and void. There is no authority to support the appellant’s contention that the PVA is entitled to belatedly assess the subject proper*688ty for 1981 taxes. KRS 132.220(1) clearly states that property shall be evaluated as of January 1. We find no reason to disturb the practical determination by the circuit court that the 1980 assessment shall be followed for the tax year of 1981.
The question of whether the property owners failed to properly exhaust their administrative remedies is not before this Court. It was correctly decided by the circuit court in overruling a motion to dismiss. It should be pointed out that International Society for Krishna Consciousness, Inc. v. Commonwealth, Ky.App., 610 S.W.2d 910 (1980), held that when the constitutionality of an assessment is challenged, judicial review may be obtained without first exhausting administrative remedies. We find no reason to disturb that decision in this case.
There is no validity to the holding of the lower court that, before the assessments of agricultural value in Fa-yette County could be upheld, the Department of Revenue is required to prove that these assessments impose the same tax burden on the farm owners in Fayette County as is imposed on the farm owners in all other counties. We are cited no statute, no constitutional requirement and no case law to support this position, for the simple reason that there are none. The burden on the Department of Revenue is simply to assure that all property in this state is assessed fairly, according to its value. If this is done, the tax burden will be equally shared. As a matter of fact, the issue should probably not have been raised. This was an action to protest the constitutionality and application of certain statutes and the assessment carried out thereunder. There was no exhaustion of administrative remedy and, thus, no opportunity presented for the Department of Revenue to make comparative analysis of any particular property. That part of the judgment of the circuit court is reversed.
It is the holding of this court that the method employed by the PVA to assess agricultural and horticultural land in Fa-yette County is unconstitutional. The circuit court was correct in applying the 1980 assessments for the tax year of 1981.
The judgment of the circuit court is affirmed in part and reversed in part.
STEPHENS, C.J., and LEIBSON, STEPHENSON and WINTERSHEIMER, JJ., concur.
GANT and VANCE, JJ., dissent by separate opinions.
AKER, J., joins GANT, J., dissenting.