STATE OF MONTANA, DEPARTMENT OF REVENUE, Petitioner, Appellant and Cross-Appellee,
CAROL LEE HEIDECKER, Respondent, Appellee and Cross-Appellant.
Submitted on Briefs: May 28, 2013
District Court of the Eighteenth Judicial District, In and For the County of Gallatin, Cause No. DV 12-98A Honorable Holly Brown, Presiding Judge
For Appellant: Amanda L. Myers, Michelle R. Dietrich, Special Assistant Attorney General, Montana Department of Revenue;
For Appellee: Michael Green, D. Wiley Barker, Crowley Fleck PLLP;
Brian Morris Justice
¶1 Appellant Department of Revenue (DOR) appeals from the order of the Eighteenth Judicial District, Gallatin County, in favor of Appellee Carol Lee Heidecker (Heidecker), on a petition for judicial review of a property tax dispute. We affirm.
¶2 We address the following issue on appeal:
¶3 Whether the District Court properly interpreted the "effectively prohibit" language in § 15-7-202(5), MCA, with respect to the restrictive covenants attached to Heidecker's property?
PROCEDURAL AND FACTUAL BACKGROUND
¶4 Heidecker purchased a 240-acre parcel of land in Gallatin County, Montana in 1980. The property had served as a dairy farm and gravel pit before the purchase. Heidecker has lived in one of the two houses on the property since the purchase. Heidecker's uncle originally lived in the other house. Heidecker sold the other house to Linda and Jerry Crisp (Crisps) in 1995 after the uncle's death. Heidecker shut down the dairy operation shortly after the purchase, but has rented out the land continuously for grain and hay production since about 1980. Heidecker subdivided a 30-acre parcel of this property into one-acre parcels in 1995. The subdivision is known as Bridger Lake Meadows (BLM). Heidecker adopted covenants for BLM at the time that he subdivided the property. The covenants reflect Heidecker's intent "to create thereon a residential community."
¶5 In particular, Article XI, Section 2, of the covenants provides that "[e]ach and every one of the Lots shall be used for private residential purposes only." The covenants enforce this intent by limiting construction to "one single family residence structure" and an attached garage. With respect to agriculture, the covenants prohibit the landowners from engaging in activities that would result in noise or vibration, light, odor, dust, smoke, or other air pollution. The covenants further prohibit landowners from owning and keeping livestock or other animals used for commercial purposes.
¶6 Heidecker discussed the covenants with Ty Typolt, Area Manager for DOR, at the time that he created the covenants. Heidecker had concerns that adoption of the covenants could trigger a property tax reclassification of the BLM property. Typolt apparently agreed that adoption of the covenants would not change immediately the agricultural classification of BLM to a residential classification. Typolt further agreed that lots at BLM would be reclassified as residential once they were sold for residential purposes. Heidecker also met with the Gallatin County planning staff and the City of Belgrade Planning Director to ensure that he could continue to use the property for agriculture. The Planning Director assured Heidecker that no provisions of the Gallatin County Subdivision Regulations barred the continued agricultural use of BLM. Heidecker has sold no lots in BLM. BLM remains in hay and grain production.
¶7 DOR reviewed BLM's covenants as part of its 2009 reappraisal. DOR reclassified BLM from agricultural land to residential tract land. Heidecker filed a request for informal review with DOR on the grounds that "[n]othing has changed on the land or its usage." DOR denied Heidecker's request due to the restrictions imposed by the covenants. Heidecker appealed to the Gallatin County Tax Appeal Board (GCTAB).
¶8 GCTAB held a hearing on Heidecker's appeal after which it upheld DOR's reclassification. GCTAB did not rely on the prohibition in the covenants. GCTAB instead determined that BLM "meets at least 3 of the criteria for a subdivision" contained in ARM 42.20.156(1)(d), and, therefore, "cannot be considered agricultural land." ...