The Colorado Court of Appeals issued its opinion in C.P. Bedrock, LLC v. Denver County Board of Equalization on April 14, 2011.
Property Taxes—Agricultural Classification.
In this property tax case, the Denver County Board of Equalization (Denver) appealed a Board of Assessment (BAA) order that reclassified a parcel of real property as agricultural for tax years 2007 and 2008. The judgment was reversed.
The subject property consists of a parcel of approximately 37 acres of vacant land that is zoned commercial mixed use and sits along Tower Road. It was acquired by C.P. Bedrock, LLC (taxpayer) in 1998 as part of a 400-acre purchase, and was leased for ranching. It was classified as agricultural through 2006. In the fall of 2005, the City and County of Denver removed a fence on the property to widen Tower Road, which made ranching no longer possible. Taxpayer leased 600 contiguous acres to Wayne Miller for farming.
In 2006, various governmental entities began work on the property as part of a cooperative effort to widen Tower Road. In January 2006, the Town Center Metropolitan District started an 80-foot-wide ditch construction project that bisected the property from east to west. It was completed in August. The workers used the entire property during construction. Miller did not graze livestock or grow crops on the property in 2006. In 2007 and 2008, Miller grew millet and winter wheat on the property.
In January 2006, Miller applied for inclusion of the property in his conservation plan with the Direct and Counter-Cyclical Program (DCP), which entitled him to a wheat subsidy payment from the Adams County branch of the federal Farm Service Agency. The property was included in March 2007.
At the BAA hearing, Miller testified that he did not perform any conservation practices on the property in 2006. The BAA found that “no farming or ranching activities occurred on the subject property during 2006.” However, it concluded that because the property was part of a larger farm unit that was actively farmed in 2006, it did not have to be reclassified, thereby returning the taxable value of the property to $3,000 from the reclassified value of $4,031,600.
On appeal, Denver argued that the BAA action was contrary to law because the property was not used as agricultural land in 2006. The Court of Appeals agreed. The Court first found that there was no farming on the property in 2006; it was used as a construction site. The Court then rejected the BAA’s alternative ground that the property was “in the process of being restored through conservation practices.” This language was clarified by legislative amendment in 1997. A parcel may qualify if it has been placed in a conservation reserve program, or if it is subject to a conservation plan approved by the appropriate conservation district for up to a period of ten crop years. The property in this case was not in a conservation reserve program in 2006. Accordingly, the BAA order to reclassify and revalue the property as agricultural land was reversed.