Landowner wants $31,000 tax break for growing $463 worth of hay
The Pitkin County commissioners denied a property owner’s request for a tax refund on Wednesday, saying the owner’s claim that the land is “agricultural” is a “sham.”
At issue was whether growing $463 in hay should entitle a property owner to a $31,000 tax break.
“This is just a sham process,” said Commissioner Michael Owsley before the commissioners declined to approve the tax refund application, then scheduled it for another hearing.
Majestic Properties LLC of Louisiana owns a 35-acre parcel of land — Lot 6, or “Homestead 6” — in the 553-acre Chaparral development in Woody Creek, on what was formerly the Braun Ranch.
There are 11 homesites on Chaparral and 94 percent of the land remains open space. A good portion of that is irrigated hayfield. The homeowners jointly pay for a ranch manager, a hay barn, a horse barn, a riding arena and a ranch operations building. The Web site for the Chaparral development says the lots “are designed for those who seek a home on the range without the complexity of owning a large parcel on a working ranch.”
Majestic Properties LLC paid $3.6 million for its parcel in 2007, but has yet to build a house on the land. It has since requested a change in how the Pitkin County Assessor’s office classified its property in 2005 and 2006, before it owned the land. As part of its agreement to purchase the property, Majestic is entitled to any tax abatements it receives.
The landowner is arguing that instead of “vacant” land, the property should have been deemed “agriculture” land by the county assessors’ office in both 2005 and 2006.
Representatives from the assessor’s office visited the parcel in 2005, when it was being converted from an old ranch to a new luxury subdivision. The assessors did not observe significant agricultural activity, so they changed the classification to “vacant.”
The property tax bill on the “vacant” land for 2006 was $30,924, and for 2005 it was $29,419. If the land had been deemed “agricultural” land, the 2006 tax bill would have been only $62.60, and the 2005 bill only $49.55.
Majestic is now seeking a refund, or an “abatement,” of the $60,342 in taxes it paid over the two years, preferring to pay only $122.
Joe Krabacher, the attorney for Majestic, told the county assessor’s office that the land designation should not have been changed to “vacant” because hay was still being grown on the property. “During the years 2004, 2005 and 2006, Homestead 6 was consistently irrigated and hayed by the Chaparral Ranch Homeowners’ Association, which sold the hay for a profit,” Krabacher said. “Under the Colorado Revised Statutes, Homestead 6 qualifies as agricultural land and the reclassification of land was erroneous.”
In 2006, $463 worth of hay was grown on Homestead 6, but that was enough to meet state requirements to be considered “farm” land.
“For this abatement, income data from the sale of hay during the two years preceding 2005 was provided and is deemed adequate documentation to prove that the subject property was being used as a ‘farm’ according to state statutes,” Larry Fite of the assessor’s office wrote in a letter to the county commissioners, who also serve as the county board of equalization and review property tax disputes.
The Colorado Division of Property Taxes defines a “farm” as “a parcel of land that is used to produce agricultural products that originate from the land’s productivity for the primary purpose of obtaining a monetary profit.” It is common for owners of “gentleman ranches” in Pitkin County to lease their land to a ranch hand, who manages their pastures and then cuts and sells the hay.
No matter how valuable the land might be for residential development, how little hay is cultivated and harvested, or how much profit is realized, many properties qualify for the “agriculture” land classification. Homes on agricultural land are taxed separately as “improvements.”
Records provided to the assessor’s office by Woody Creek Ventures LLC, which once owned six lots in Chaparral, showed that it spent $49,910 in 2004 on expenses such as a weed control, irrigation, water, and fertilizer, and sold $9,550 worth of hay that year from its six lots. But it also received extensive property tax exemptions.
“It is so hard to grow decent hay,” said Clark Lipscomb, vice president of Woody Creek Ventures LLC. “It is costly and time consuming. And if you didn’t do it, those fields would be a mess.” Lipscomb added that the commissioners were overlooking the benefits to the county that hay fields bring. “It is a benefit to the county to keep the property in ag production because it keeps the weeds down and it employs people,” Lipscomb said. “It is an incentive for people to take good care of their property.”
But the county commissioners on Wednesday saw things differently. “All the taxing authorities in the county are losers on this,” said Commissioner Jack Hatfield.
The board voted 4-1 against approving the abatement, with Commissioner Patti Clapper voting in favor, but not commenting on the issue.
The issue of landowners’ paying dramatically lower taxes for growing hay is a practice Tom Isaac, the Pitkin County assessor, first tried to change at the state level in the early 1990s, but without success.
There are now 12,866 acres of irrigated or meadow land in Pitkin County classified as “agriculture” lands. The assessor places a valuation on those 12,866 acres of ag land at only $2.9 million.
To help counter the ag deduction trend, when the county commissioners approved the Chaparral development in the early 1990s, they required that when a property owners builds a residence on his or her lot, the owner can no longer claim an agricultural tax break for the balance of the property.
bgs@aspendailynews.com
