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STRIB IV LLC v. County of Hennepin

Supreme Court of Minnesota

November 9, 2016

STRIB IV, LLC fka Richard T. Burke I, LLC, Relator,
v.
County of Hennepin, Respondent.

         Tax Court Office of Appellate Courts

          Paul W. Chamberlain, Ryan R. Kuhlmann, Chamberlain Law Firm, Wayzata, Minnesota, for relator.

          Lori Swanson, Minnesota Attorney General, Saint Paul, Minnesota; and Michael O. Freeman, Hennepin County Attorney, Jane N.B. Holzer, Assistant County Attorney, Minneapolis, Minnesota, for respondent.

         SYLLABUS

         1. The word "individuals" as used in Minnesota's Green Acres statute, Minn. Stat. § 273.111 (2014), means "natural persons."

         2. Minnesota's Green Acres statute does not authorize a taxing authority to disregard a single-member limited liability company as an entity separate from its member.

         Considered and decided by the court without oral argument.

          OPINION

          LILLEHAUG, Justice.

         Hennepin County (the County) assessed real estate taxes on two properties in Medina (the Subject Properties) owned by STRIB IV, LLC (STRIB IV). STRIB IV submitted an application to the County to classify the Subject Properties under Minnesota's Green Acres statute, Minn. Stat. § 273.111 (2014). The County denied that application. The tax court affirmed the County's decision. Because we conclude the tax court correctly determined that STRIB IV is not entitled to Green Acres classification, we affirm.

         The facts of this case are undisputed. STRIB IV is a single-member limited liability company (LLC) of which Richard T. Burke is the only member. Burke uses STRIB IV solely as a landholding entity to shield himself from personal liability. STRIB IV has owned the Subject Properties (which total 39.96 acres) in fee simple since November 2007. STRIB IV leases eight acres to an unspecified entity to produce hay, and two acres grow noncommercial apples. Burke does not live on the Subject Properties.

         Burke personally owns eight parcels adjoining the Subject Properties, and owns a ninth adjoining parcel through another single-member LLC, Richard T. Burke II, LLC. Those nine parcels include 230 acres used for agriculture, and have Green Acres classification.[1]

         STRIB IV applied to the County seeking Green Acres classification for the Subject Properties. The County denied the application, [2] and STRIB IV appealed to the tax court. The parties agreed that, with no factual disputes, the tax court only had to decide a single legal issue: whether the Green Acres statute "disregards" a single-member LLC as an entity separate from its owner. In other words, is land owned by an LLC like STRIB IV entitled to Green Acres classification? The tax court concluded that the statute does not disregard single-member LLCs. STRIB IV appealed that order by writ of certiorari.

         I.

         STRIB IV argues that the tax court erred when it concluded, as a matter of law, that land owned by a single-member LLC such as STRIB IV is not eligible for Green Acres classification. We review de novo whether the tax court committed an error of law, such as an erroneous interpretation of a statute. ILHC of Eagan, LLC v. Cty. of Dakota, 693 N.W.2d 412, 418-19 (Minn. 2005).

         The Green Acres statute "provides property tax relief to land that is primarily devoted to agricultural use 'and located on the fringes or amidst expanding urban areas.' " Raisanen v. Cty. of Hennepin, 678 N.W.2d 669, 670 n.1 (Minn. 2004) (quoting Barron v. Hennepin Cty., 488 N.W.2d 290, 291 (Minn. 1992)). Property classified under the Green Acres statute is valued "solely with reference to its appropriate agricultural classification, " rather than according to its market value. Minn. Stat. § 273.111, subd. 4(a).

         The Minnesota Legislature included a directive that the Green Acres statute "shall be broadly construed to achieve its purpose." Id., subd. 12. That purpose is as follows: "The legislature finds that it is in the interest of the state to encourage and preserve farms by mitigating the property tax impact of increasing ...


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