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100 Val Vista/Montgomery LLC v. Pinal County

Court of Appeals of Arizona, First Division

June 11, 2019

100 VAL VISTA/MONTGOMERY LLC, et al., Plaintiffs/Appellees,
v.
PINAL COUNTY, Defendant/Appellant.

          Appeal from the Arizona Tax Court No. TX2013-000321 The Honorable Christopher T. Whitten, Judge

          Mooney, Wright & Moore, PLLC, Mesa By Paul Moore, Jim L. Wright Counsel for Plaintiffs/Appellees

          Pinal County Attorney's Office, Florence By Christopher C. Keller, Cedric I. Hay Helm, Livesay & Worthington, Ltd, Tempe By Roberta S. Livesay Co-Counsel for Defendant/Appellant

          Judge Kent E. Cattani delivered the opinion of the Court, in which Presiding Judge David D. Weinzweig and Judge James P. Beene joined.

          OPINION

          CATTANI, JUDGE

         ¶1 This tax appeal involves approximately 2, 000 acres of cattle grazing land in Pinal County (the "Property") owned by 100 Val Vista/Montgomery LLC, et al. (collectively, "Appellees"). The tax court entered judgment requiring Pinal County to classify the Property as agricultural for the 2014 tax year. The County appealed, challenging whether Appellees satisfied the statutory requirements for such classification, including that there be a reasonable expectation of operating profit from the agricultural use of the property. Ariz. Rev. Stat. ("A.R.S.") § 42-12152(A)(2). We hold that a taxpayer's submission of an affidavit as authorized by A.R.S. § 42-12152(C) conclusively establishes the reasonable expectation of operating profit requirement, and because Appellees filed the requisite affidavit, we affirm the tax court's ruling granting Appellees' motion for partial summary judgment as to that issue. We further affirm the tax court's rulings that Appellees satisfied the remaining requirements for agricultural land classification, including the court's findings after trial regarding the Property's functional contribution to an overall ranching operation and the economic feasibility of the ranching operation.

         FACTS AND PROCEDURAL BACKGROUND

         ¶2 During the relevant tax periods, Appellees leased the Property to cattle rancher Charles Bush and his company Rancho Asueno, a ranching operation composed of multiple noncontiguous parcels of land throughout Pinal County. As part of the lease, Appellees allowed Bush and Rancho Asueno to run cattle on the Property. Bush also oversaw the Property, including maintaining fencing, ensuring sufficient forage and water for livestock, moving cattle, and monitoring traffic on the land.

         ¶3 For the 2014 tax year, the county assessor classified the Property as vacant land, and the State Board of Equalization upheld the classification. Appellees appealed that determination to the tax court, and after a bench trial, the court reversed, ordering the County to classify the Property as agricultural.

         DISCUSSION

         ¶4 Under A.R.S. §§ 42-12151 to -12152, as relevant here, to be classified as agricultural property for tax purposes, land used for grazing must meet four criteria. First, the grazing land must have a minimum carrying capacity of 40 animal units and contain an economically feasible number of animal units. A.R.S. § 42-12151(3). Second, the primary use of the property must be agricultural grazing and the property must have been in active production according to generally accepted range management practices for three out of the five previous years. A.R.S. § 42-12152(A)(1). Third, the property must have a reasonable expectation of operating profit from its agricultural use. A.R.S. § 42-12152(A)(2).[1] And fourth, property consisting of noncontiguous parcels must be managed and operated on a unitary basis, with each parcel making a functional contribution to the agricultural use of the property. A.R.S. § 42-12152(A)(3).

         I. Reasonable Expectation of Operating Profit.

         ¶5 Before trial, the tax court granted Appellees' motion for partial summary judgment regarding the third requirement (reasonable expectation of operating profit) after Appellees filed an affidavit attesting that the Property was "actively producing with an expectation of profit." The County challenges that ruling. We review the grant of a motion for partial summary judgment de novo, see Cramer v. Starr, 240 Ariz. 4, 7, ¶ 8 (2016), viewing the evidence in the light most favorable to the County, the non-moving party. See Rasor v. Nw. Hosp., LLC, 243 Ariz. 160, 163, ¶ 11 (2017).

         ¶6 In 2012, the Legislature added subsection (C) to § 42-12152 to provide that the reasonable expectation of profit requirement "shall be satisfied if the owner files with the assessor an affidavit of agricultural use, signed by the owner attesting that all information in the affidavit is true and the property is actively producing with an expectation of profit." ...


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