Appeal from the District Court of the Second Judicial District of the State of Idaho, in and for Latah County. The Hon. John R. Stegner, District Judge.
The opinion of the court was delivered by: Eismann, Justice.
This is an appeal out of Latah County from a judgment of the district court holding that an agricultural exemption for real property taxes was not available to the appellant because
agricultural use of the real property would violate the city zoning ordinance. Because the zoning ordinance is irrelevant to qualifying for the exemption, we vacate the judgment of the district court.
Thompson Development, LLC (Landowner), owns real property in the City of Moscow that in early 2008 was platted as Phases I, II, and III of Indian Hills VI Addition. That real property is contiguous to approximately 400 acres of land owned and farmed by the Thompson family. In 2009, Landowner owned 13.88 acres of real property in Phases I-III, and in 2010 the acreage it owned was 15.97 acres.
The portion designated as Phase I, which consists of 4.91 acres, had not been seeded or fertilized in the fall of 2007. In the summer of 2008, Landowner hired a contractor to install infrastructure improvements in Phase I, which included removing some topsoil, compacting soil, and installing a street, sidewalks, and underground utilities.
In the fall of 2008, Landowner asked the contractor to leave the ground in Phase I in a condition sufficient to prepare for spring planting in 2009, and the land was chisel plowed (excluding the street and sidewalks) pursuant to customary farming practices. In the spring of 2009, spring wheat was planted on the property and then harvested in August of 2009.
In the fall of 2009, stubble was left standing for erosion control and, in the spring of 2010, five acres of the property, which included Phase I, were seeded for grass hay production and later clipped for weed control and plant development, as is usual the first year of grass seeding.
Landowner applied for agricultural exemptions to the farmed portion of the platted property for the tax years of 2009 and 2010. The assessor denied an exemption for 4.91 acres of the Phase I property, which is located on either side of the newly-paved street. Landowner appealed the 2009 decision to the Latah County Board of Equalization and then to the Board of Tax Appeals. It appealed the 2010 decision to the Board of Equalization. It then filed petitions for judicial review from the decision of the Board of Tax Appeals regarding the 2009 exemption and from the decision of the Board of Equalization regarding the 2010 exemption. The petitions for judicial review were consolidated, and the district court conducted a de novo review. Ada County Bd. of Equalization v. Highlands, Inc., 141 Idaho 202, 205, 108 P.3d 349, 352 (2005). All parties moved for summary judgment, and the district court granted summary judgment to the Board of Tax Appeals and to the Board of Equalization. The district court held that the agricultural exemption was properly denied because agricultural use of the property violated the Moscow City Zoning Code. Landowner then timely appealed.
Did the District Court Err in Holding that the Zoning Ordinance Was Relevant to the Agricultural Exemption?
Idaho Code section 63-602K sets forth the requirements for a property tax exemption for agricultural land. It exempts "[t]he speculative portion of the value of land actively devoted to agriculture." I.C. § 63-602K(1). The meaning of the phrase "land actively devoted to ...