Appeal from Common Pleas Court, Bradford County; Honorable Jeffrey A. Smith, Judge.
Fred N. Smith, Towanda, for appellant.
Jonathan P. Foster, Riffle, Foster & Hartley, Athens, for appellee.
Doyle and Barry, JJ., and Narick, Senior Judge.
[ 130 Pa. Commw. Page 410]
Ronald D. McLoughlin appeals an order of the Court of Common Pleas of Bradford County which dismissed his appeal from an order of the Bradford County Board of Assessment (the Board) revoking a preferential assessment previously granted for certain lands pursuant to the Pennsylvania Farmland and Forest Land Assessment Act of 1974 (the Act), Act of December 19, 1974, P.L. 973, as amended, 72 P.S. §§ 5490.1--5490.13 (Supp.1989-90).
The parties stipulated to the following facts. McLoughlin owns 229.2 acres in Ulster Township. An area consisting of less than two acres houses a stable and arena building and is used for horseback riding instruction; the rest of the 229.2 acres constitute an "agricultural use" as defined in Section 2 of the Act. In 1983, McLoughlin applied for a preferential assessment which was granted as to the land
[ 130 Pa. Commw. Page 411]
used for agricultural purposes; the tract used for riding instruction was and has continually been assessed at fair market value rather than on a preferential basis. In December of 1987, the Board notified McLoughlin by letter that, because of the use of the two acre tract for a riding school, it was revoking the preferential assessment and planning to assess the entire tract at fair market value. A hearing was held before the Board which affirmed its prior decision to revoke the preferential assessment. McLoughlin then took a timely appeal to the court of common pleas. Based on a stipulation of facts, the court affirmed the Board's order and dismissed McLoughlin's appeal. This appeal followed.
In 1973, the voters of this Commonwealth amended the Pennsylvania Constitution, giving the Legislature the power to "[e]stablish standards and qualifications for private forest reserves, agricultural reserves, and land actively devoted to agricultural use, and make special provision for the taxation thereof . . . ." Pa. Const. Art. 8, § 2(b)(i). Following the adoption of this constitutional provision, the Legislature enacted the Act in 1974. This Court has recognized the purpose behind the Act.
Under the Act, qualifying land must be valued, for taxation purposes, not at its fair market value, but at its present use value . . . . This valuation mechanism permits the qualifying land located in an area subject to developmental pressure to be assessed at its present use value and thus presents an incentive to preserve such land in its current state (emphasis in original).
Hess v. Montgomery County Board of Assessment Appeals, 75 Pa. Commonwealth Ct. 69, 71 n. 5, 461 A.2d 333, 334 (1983) (citations omitted).
Section 3 of the Act establishes the qualifications for the preferential assessment and provides:
(a) For general property tax purposes, the value of land which is presently devoted to agricultural use, agricultural reserve, and/or forest reserve shall on application of the owner and approval thereof and hereinafter
[ 130 Pa. Commw. Page 412]
provided shall be that value which such land has for its particular use if it also meets the following conditions:
(1) Land presently devoted to agricultural use: Such land was devoted to agricultural use the preceding three years and is not less than ten contiguous acres in area or has an anticipated yearly gross income of two thousand dollars ($2,000).
(2) Land presently devoted to agricultural reserve: Such land is not less than ten contiguous acres in area.
(3) Land presently devoted to forest reserve: Such land is not less than ten contiguous acres in area.
(4) The contiguous tract of land for which application is made is not less than the entire contiguous area used by the owner for agricultural or forest reserved purposes.
72 P.S. § 5490.3(a) (emphasis added).
Both the Board and the trial court believe that McLoughlin's preferential assessment was erroneously granted at the time of his application for the same. This belief is based upon the assumption that two acres used for riding instruction disqualified the entire tract from any benefit pursuant to the Act. For the following reasons, we believe that McLoughlin is entitled to the preferential assessment; accordingly, we will reverse the order of the trial court.
Our review of the entire Act and the regulations thereunder, 7 Pa.Code §§ 137.1 -- 137.68, has discovered nothing which compels the conclusion that use of less than two acres for riding instruction disqualifies the remaining some 227 acres, all of which is inarguably used as an "agricultural use", from the Act's preferential assessment. The trial court in its opinion does not give a basis for its decision, other than stating that the riding stable is not an agricultural use and relying upon the doctrine that tax exemptions must be strictly construed against the taxpayer. 1 Pa. C.S. § 1928(b). The trial court does not detail, however, what portion of the Act, when construed strictly, compels its conclusion. The Board relies upon 72 P.S. § 5490.3(a)(4), again which states, that "[t]he contiguous
[ 130 Pa. Commw. Page 413]
tract of land for which application is made is not less than the entire contiguous area used by the owner for ...