Ag Zoning: Farmers Challenge Constitutionality of Reassessed Ag Structures
In 2007, Davison County, South Dakota, began the process of reassessing “agricultural structures” upon discovering “discrepancies” in the county’s current assessments. The county assessor reassessed four of twelve townships that year. For the most part, the new valuations were higher than the existing valuations. In some instances, the reassessment resulted in an 80 percent increase in valuation. Two farmers who owned reassessed ag structures challenged the assessments, claiming that the county’s plan created an unconstitutional lack of uniform taxation within the county. Essentially, the plaintiff farmers asked the court to issue a “writ of mandamus” ordering the county assessor to implement an assessment roll that was more fair and constitutional.
At trial, the plaintiffs presented evidence of the increased valuation of the ag structures located on their property. The farmers challenged the county’s plan under Article XI, §2, of the South Dakota Constitution, which mandates that the “burden of taxation may be equitable upon all property, and in order that no property which is made subject to taxation shall escape.” The plaintiffs were unable to present sufficient evidence to overcome the presumption that the county’s reassessment plan was made in accordance with South Dakota law.
On appeal, the South Dakota Supreme Court first examined the definition of a “taxing district” under South Dakota law. The plaintiffs argued that the county’s plan to reassess only four townships of twelve each year lacked uniformity of taxation within a district. The county argued, on appeal, that each township was a taxing district in itself. The appellate court found that while South Dakota law does not expressly define the term “taxing district,” it is clear from the language of other state statutes and guidance from the state’s attorney general that a township is a taxing district. This was an issue of first impression for the courts. In South Dakota, a taxing district refers to a district that is “vested with the powers of a local board of equalization.” If a township is organized under South Dakota law, it is automatically vested with the powers of a local board of equalization.
The language of other South Dakota state statutes also supported the appellate court’s conclusion that townships are “taxing districts.” For instance, a 1993 South Dakota Attorney General Opinion interpreting the relevant law defined a township as a taxing district. The plaintiffs made the mistake of arguing, here that the county was the taxing district. They presented evidence to establish that the reassessments lacked uniformity because only 1/3 of the taxpayers with ag structures were subject to reassessment in a tax year. The appellate court did point out that they have never addressed whether the South Dakota Constitution requires uniform taxation within townships. However, they have recognized in prior case law that uniformity is required in districts vested with powers of a board of equalization- townships have these powers in South Dakota.
The next question the appellate court addressed was whether a reassessment plan that creates a “temporary lack of uniform taxation among the townships within a county is constitutional.” The court looked to other Midwestern states for authority. The Supreme Court of Minnesota, in 1971, held that even though a reassessment plan created a temporary lack of uniformity among the county’s townships, it did not create a lack of uniformity within the townships themselves. The court opined:
From a strictly technical standpoint, if we were to consider the county as a single taxing district, there might be some difficulty in justifying disparity, even temporarily, under our constitutional requirement that property of similar nature be taxed equally, but it seems the only practical solution to the problem is to permit the authorities having the duty to reassess the property a reasonable time within which to complete a comprehensive reassessment.
Thus, the issue before the court boiled down to a question of practicality and the burden on county assessors in South Dakota. According to the court, if the county develops a comprehensive reassessment plan within a reasonable time then, in most cases, the plan is constitutional. Here, the county’s plan was reasonable and maintained “reasonable uniformity” within the townships. Stehly v. Davison County, et al., No. 25742-a-GAS, 2011 S.D. 49 (2011).
The Center for Agricultural Law and Taxation does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. The Center's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.