Welby Gardens v. Adams County Bd. of Equalization

Justice KOURLIS,

dissenting:

In my view, the statutory language concerning the definition of agricultural land in sections 39-l-102(1.6)(a)(I) and (3.5), is ambiguous. Specifically, the statutory directive that horticultural products must “originate from the land’s productivity” in order to qualify the underlying land for agricultural tax status is unclear as written. The relevant legislative history provides no definitive guidance. In the face of such an intractable ambiguity, I suggest that the court must rule in favor of the taxpayer, thus giving the land under the greenhouses the agricultural land status. Accordingly, I respectfully dissent from the majority opinion.

I. Rules of Statutory Interpretation

Our purpose here is to attempt to discern what the General Assembly intended and then give effect to that intent. Farmers Group, Inc. v. Williams, 805 P.2d 419, 422 (Colo.1991); People v. Dist. Ct., 713 P.2d 918, 921 (Colo.1986). To fulfill that purpose, we look first to the language of the statute, and give each of the words their plain and ordinary meaning. Dist. Ct., 713 P.2d at 921. We presume that the General Assembly intended each provision of the statute to be *1001effective and intended a just and reasonable result. § 2-4-201(1)(b) and (c), 1 C.R.S. (2002); People v. Luther, 58 P.3d 1013, 1015 (Colo.2002); Charms v. Boom, 766 P.2d 665, 667 (Colo.1988) (“[W]e must read and consider the statutory scheme as a whole to give consistent, harmonious and sensible effect to all its parts.”).

If a statutory provision is clear and does not conflict with other portions of the applicable statutory construct, then we need not look further than the plain language. Luther, 58 P.3d at 1015. If, however, the provision is reasonably susceptible to multiple interpretations, or if a particular interpretation would conflict with other portions of the statute, we then look to various other tools of statutory interpretation, such as legislative history, prior law, the consequences of á given construction, and the goal of the entire statutory scheme. § 2-4-203; Luther, 58 P.3d at 1015.

Importantly, when we are interpreting statutes that impose taxes, we construe ambiguities in those statutes against the government and in favor of the taxpayer. See Transponder Corp. v. Prop. Tax Admin., 681 P.2d 499, 504 (Colo.1984); Associated Dry Goods v. City of Arvada, 197 Colo. 491, 496, 593 P.2d 1375, 1378 (1979); City & County of Denver v. Sweet, 138 Colo. 41, 52, 329 P.2d 441, 447 (1958).

II. Analysis

The Colorado Constitution mandates that agricultural lands are to be valued for ad valorem taxation purposes “solely by consideration of the earning or productive capacity of such lands capitalized at a rate as prescribed by law.” Colo. Const. art. X, § 3(1)(a); Douglas County Bd. of Equalization v. Clarke, 921 P.2d 717, 720 (Colo.1996); Boulder County Bd. of Equalization v. M.D.C. Constr. Co., 830 P.2d 975, 978 (Colo.1992).

The General Assembly has enacted various provisions defining agricultural land, so as to establish the parameters for the special tax status. Specifically, the General Assembly defined “agricultural land” as:

A parcel of land ... that was used the previous two years and presently is used as a farm or ranch, as defined in subsections (3.5) and (13.5) of this section_ “Agricultural land” under this subpara-graph (I) includes land underlying any residential improvement located on such agricultural land and also includes the land underlying other improvements if such improvements are an integral part of the farm or ranch and if such other improvements and the land area dedicated to such other improvements are typically used as an ancillary part of the operation.

§ 39-1-102(1.6)(a)(I), 11 C.R.S. (2002). The statute defines “farm” as “a parcel of land which is used to produce agricultural products that originate from the land’s productivity for the primary purpose of obtaining a monetary profit.” § 39-1-102(3.5) (emphasis added). “Agricultural products” are defined with “livestock products” and include “plant or animal products in a raw or unprocessed state that are derived from the science and art of agriculture_”§ 39-1-102(1.1). For the purposes of that section, the legislature defined “agriculture” as “farming, ranching, animal husbandry, and horticulture.” Id. Hence, to determine this land’s status, we must discern whether the land can be classified as a “farm” under the statutory definition.

The Majority agrees that the land under Welby Gardens’ greenhouses is used to produce agricultural products for the primary purpose of obtaining a monetary profit, thereby satisfying part of the operative definition of “farm”. Maj. op. at 994. However, the Majority concludes, with reference to the plain language of the statute, that the greenhouses fail to satisfy the balance of the test because there is an insufficient nexus between the agricultural product grown in the greenhouses and the land itself. Maj. op at 994.

I believe the phrase “originate from the land’s productivity” is inherently ambiguous and could refer to the productivity of that particular land or the productivity of land more generally. Accordingly, I would look to additional interpretive aids in order to ascertain the intent of the language in sections 39-l-102(1.6)(a)(I) and (3.5). Maddeningly, even *1002after looking to those interpretive aids, I suggest that the answer is still not apparent. Hence, in the end, I would conclude that because ambiguity should be resolved in favor of the taxpayer, because the court of appeals has consistently held that similar operations constitute agricultural land, and because the Division of Property Taxation for the State of Colorado has amended the Assessors Reference Libraries, Land Valuation Manual, to reflect the decisions of the court of appeals, the land under Welby Gardens’ greenhouses constitutes “agricultural land,” and is eligible for taxation as agricultural property.

A. Ambiguity

Determining that a statutory provision is ambiguous only requires that the language is reasonably susceptible to more than one reasonable interpretation. Grant v. People, 48 P.3d 543, 548 (Colo.2002). The phrase “originate from the land’s productivity” certainly meets this requirement. First, the statute, on its face, is unclear as to whether the product must originate from that land’s productivity or whether it would be sufficient that the product came from some land’s productivity. Second, even if the product must originate from that particular land, it is still possible to construe the statute such that growth of the product in the greenhouse would be sufficient. Indisputably, the plants in the greenhouse “grow” while they are in the greenhouse, and could, thus, “originate from the land’s productivity.” The term “productivity” certainly can encompass something more than growing from the soil of that piece of property. The phrase is, quite simply, confusing, leaving us questioning to what degree, if any, the agricultural product needs to be connected to the land on which it is produced.

B. Case Law and Administrative Interpretation

Judicial precedent affords the phrase a broad and loose meaning. First, in Morning Fresh Farms, Inc. v. Weld County Board of Equalization, 794 P.2d 1073, 1074 (Colo.App.1990), the court of appeals considered whether a 40-acre parcel of an 800-acre farm, which accommodated numerous chicken houses used to produce eggs for profit, met the statutory definition of a farm. The chickens housed in the egg production facility were primarily fed feed bought from outside sources, although a small portion of the feed came from the farm operations. Id. Other than that bit of feed, the chicken operation was completely self-contained and the chickens never touched the ground. Id. The Board of Assessment Appeals concluded that the land did not fall within the definition of a farm and the court of appeals reversed that decision. Id. The court found that the statute in no way excluded self-contained portions of farmland, within which livestock were sustained without feeding off the ground itself. Id. While not using the exact statutory phrase at issue here, the court concluded that “eggs, as agricultural products, emanate from the productivity of this farm’s land.” Id. at 1074-75; see also Del Mesa Farms v. Bd. of Equalization, 956 P.2d 661, 663 (Colo.App.1998) (citing Morning Fresh Farms to state that certain property used in egg production operation constituted agricultural equipment).

This court has given credence to an administrative interpretation of a statute when the statute is subject to differing reasonable interpretations, and when the issue comes within the agency’s special expertise. See Colo. State Pers. Bd. v. Dep’t of Corr., 988 P.2d 1147, 1150 (Colo.1999) (“[W]e will defer to the agency’s construction when the statute may be given more than one reasonable interpretation and the agency has employed its expertise to select a particular interpretation.”); Huddleston v. Grand County Bd. of Equalization, 913 P.2d 15, 17 (Colo.1996) (“Judicial deference is appropriate when the statute before the court is subject to different reasonable interpretations and the issue comes within the administrative agency’s special expertise.”) Here, the Property Tax Administrator, who is charged with overseeing the state property tax valuation system, has addressed this issue in her Assessor’s Reference Library manuals. She cites Morning Fresh Farms, Del Mesa Farms and two other unpublished court of appeals’ *1003opinions1 for the proposition that: “Based on the language in the above court cases, it is proper to classify parcels that produce agricultural products through ‘farming, ranching, animal husbandry and horticulture’ as agricultural.” 3 Assessors Reference Library: Land Valuation Manual at 5.16-5.17 (rev.7/01). She does not require any particular nexus to the land on which the agricultural products are being grown.

The Majority has declined to follow Morning Fresh Farms and its progeny. While this court is not bound by decisions of the court of appeals or by the interpretations provided by the Property Tax Administrator, we should nonetheless be wary of overruling the sole appellate construction of a statute that has been in place for over ten years and that has been incorporated into the statewide administrative standards without a compelling reason to do so. See Kern v. Gebhardt, 746 P.2d 1340, 1345 (Colo.1987) (following the principles of stare decisis to rely on a court of appeals decision that had been the only appellate construction of the statute for the previous ten years). The principle of reliance upon precedent, or stare decisis, promotes uniformity, certainty, and stability in the law. Id.; Smith v. Dist. Ct., 907 P.2d 611, 612 (Colo.1995). Under the stare decisis doctrine, courts should follow an established rule of law, “unless clearly convinced that the rule was originally erroneous or is no longer sound because of changing conditions and that more good than harm will come from departing from precedent.” People v. Blehm, 983 P.2d 779, 788 (Colo.1999).

The decision in Morning Fresh Farms has been in place since 1990. Other divisions of the court have followed that decision, and no division of the court of appeals has held to the contrary. Furthermore, the Property Tax Administrator has relied on the holdings of the court of appeals, as have landowners. The court, in Morning Fresh Farms, did note that a small portion of the chicken feed was grown on the farm land; however, the court did not then tie that fact to the conclusion that the chicken operation “emanatefs] from the productivity of this farm’s land.” Morning Fresh Farms, 794 P.2d at 1074-75. Furthermore, the cases following the reasoning of Morning Fresh Farms have not relied on a small bit of feed to hold that the agricultural products “originate from the land’s productivity.” I am not persuaded that the greenhouses at issue here are distinguishable from the chicken operations in the Morning Fresh Farms line of cases, as in either situation the taxpayer is growing an agricultural product on the land. Further, I am not of the view that the courts of appeals’ decisions are clearly erroneous, or that any conditions have changed that would warrant departure from that precedent.

C. Legislative History

The legislative history surrounding the enactment of section 39-1-102, Senate Bill 6, merely confirms my conclusion that the provision is ambiguous — it does not dispositively resolve that ambiguity. As the Majority points out, the Senate and the House clearly had differing points of view on the issue. Upon passage in the Senate, the definition of “farm” included land “which is used for the primary purpose of growing, raising, and harvesting agricultural products for the primary purpose of obtaining a monetary profit.” S.B. 6, 54th Gen. Assemb., 1st Reg. Sess. (Colo.1983) (passed the Senate Mar. 28, 1983) (emphasis added). The Majority agrees that under this definition, the land underlying greenhouses, except those growing flowering or ornamental plants, would clearly qualify for the favorable tax treatment allotted to agricultural lands. Maj. op. at 996. The House, however, inserted the word “tilled” into the definition of a farm *1004with the express intent of excluding retail greenhouse operations. Under the House definition, a farm meant “a parcel of land which is tilled for the primary purpose of growing, planting, and harvesting agricultural products for the primary purpose of obtaining a monetary profit.” Id. (emphasis added) (passed the House May 4,1983).

The Conference Committee charged with arriving at a Bill acceptable to both Houses debated this precise point at some length. Members of the Senate delegation made a motion to revert back to the broader “used” language, but that motion failed. Senator Beatty and Senator Powers, however, would not allow the provision to go forward with the “tilled” definition and they urged a more expansive definition. Receiving guidance from other states’ definitions, the Conference Committee arrived at the language “originate from the land’s productivity.” Representative Reeves explained that this language would require a tie to the parcel of land. Hearing on S.B. 6 Before Conference Committee, 54th Gen. Assemb., 1st Reg. Sess. (May 17, 1983) (statement of Rep. Reeves). While voting against the amendment, both Senator Beatty and Senator Powers voted to report the bill to both Houses, with the reservation that they viewed the language as encompassing something more than actually growing from the soil. For instance, Senator Powers expressed his view that “livestock and livestock products are produced from the land’s productivity.” Id. (statement of Sen. Powers). Under this logic, agricultural products need not come directly from the soil. Senator Beatty expressed concern that the legislative history would indeed reflect two legislative intents — presumably, one that included such uses as greenhouses, and one that did not. Id. (statement of Sen. Beatty).

Subject to the tenuous compromise reached at Conference, the Bill proceeded to the House and Senate floors. The continued disagreement about what would be included in the new definition of farm became apparent. As the Majority points out, Representative Heim explained to the House that the new definition reflected the intention “that there is a direct nexus required between something that is grown and raised, and the land on which it is grown and raised.” Debate on S.B. 6 before the House of Representatives, 54th Gen. Assemb., 1st Reg. Sess. (May 17, 1983) (statement of Rep. Heim). In the Senate, Senator Beatty explained that the new definition was broader than that originally adopted by the House and that “every agricultural product originates in some form from the land’s productivity.” Debate on S.B. 6 before the Senate, 54th Gen. Assemb., 1st Reg. Sess. (May 17, 1983) (statement of Sen. Beatty). This interpretation met opposition from Senator Stewart, who insisted that the new language still required that “whatever that agricultural product is, it must have come from the productivity of the soil, of the land which is agricultural land; not from the productivity of the building or improvement that might be put on it.” Id. (statement of Sen. Stewart).

The lack of a uniform legislative intent is painfully clear from these proceedings. We do not know whether the legislature as a whole intended that the phrase “originate from the land's productivity” include only products that are grown from the soil, or whether it intended it to include agricultural products in general — irrespective of their direct connection to that land.

D. Ambiguity resolved in favor of the taxpayer

Due to the ambiguity in the statute and the lack of guidance by the legislature, I suggest that we must rule in favor of the taxpayer. See Transponder Corp. v. Prop. Tax Admin., 681 P.2d 499, 504 (Colo.1984); Associated Dry Goods v. City of Arvada, 197 Colo. 491, 496, 593 P.2d 1375, 1378 (1979); City & County of Denver v. Sweet, 138 Colo. 41, 52, 329 P.2d 441, 447 (1958).

This view is buttressed by the fact that the Division of Property Taxation Assessors’ Reference Library guidelines would support such a conclusion, as would the court of appeals’ precedent on point. The General Assembly, which is charged with knowledge of applicable ease law, chose not to amend the statute to achieve a different result. See Vaughan v. McMinn, 945 P.2d 404, 409 (Colo.1997) (noting that the legislature is pre*1005sumed to know of judicial precedent in an area of law when it legislates in that area).

III. Conclusion

Notably, while the Majority concludes that the statute is not ambiguous, it does not define the term or provide guidance as to what “originate from the land’s productivity” means. It does hold that there must be some connection between the agricultural product produced and the land itself and that building a greenhouse on the land is insufficient. Maj. op. at 995. I question what connection is needed and how close that connection must be. For instance, would it be enough if several, or even one, of the containers in the greenhouse contained soil from the ground beneath it? Does it matter whether the plants in the greenhouse remain there and grow there for a period of time or are just briefly warehoused for sale?

I do note that the definition of agricultural under section 39-1-102(1.1), provides that “agricultural” includes “farming, ranching, animal husbandry, and horticulture.” Under the Majority’s position, the production of animal products through animal husbandry may not be susceptible to the agricultural land classification unless the animals are in some way fed from products grown on that land. I find no statutory support for that conclusion.

Until the General Assembly resolves this confusion, it is my view that we should afford the taxpayer the benefit of the “tie”, continue to follow the reasoning of the court of appeals and the Property Tax Administrator, and rule in favor of the taxpayer, Welby Gardens. For these reasons, I respectfully dissent from the Majority opinion.

I am authorized to state that Chief Justice MULLARKEY and Justice HOBBS join in this dissent.

. Del Mesa Farms v. Hall, 98CA1611, slip op. at 4 (Colo.App. Aug. 12, 1999) (finding that eggs and replacement laying hens originate from the productive use of the land “in the sense that there were no replacement laying hens until Del Mesa Farms, through animal husbandry, raised them on the land, and no eggs until Del Mesa Farms, again through animal husbandly, created the environment on the land for them to be laid”); Del Mesa Farms v. Bacus, 99CA0527, slip op. at 5 (Colo.App. Feb. 24, 2000) (holding that animal husbandry operations were included in the definition of farm, even if the animals do not touch the ground, graze on the land, or feed from crops grown on the land, and holding that land used to support buildings used in the production of agricultural products is a productive use of the land).