Volume 11 - Opinions of Counsel SBRPS No. 100
Agricultural exemption (agricultural production requirement) (gross sales requirement) (landowner incentive program) - Agriculture and Markets Law, §§ 301, 305, 306; Real Property Tax Law, § 481:
Lands that participate in the New York State Landowner Incentive Program may qualify for an agricultural assessment only if those lands are used in agricultural production.
The Program’s wildlife conservation incentive payments may not be considered in computing the statutory gross sales requirement.
We have received an inquiry concerning the agricultural assessment program (Agriculture and Markets Law [AML], Article 25-AA; Real Property Tax Law, § 481). The question is whether land enrolled in the New York State Landowner Incentive Program [LIP] may be eligible to receive an agricultural assessment. The inquiry involves LIP Site Management Plans to protect the privately owned grassland habitats of certain wild birds, some of which lands are apparently owned by commercial farmers. We understand that, typically, projects will involve mowing fields after those birds have finished nesting.
In order to receive an agricultural assessment pursuant to AML, section 305(1)(a) or 306(1), land must be “used in agricultural production” as that phrase is defined by AML, section 301(4). Generally, such use must involve “the production for sale of crops, livestock or livestock products” (AML, § 301(4)).
Such production need not occur when agricultural land is “set-aside” for an eligible “federal conservation program” (AML, § 301(4)(e)). {1} Accordingly, commercial agricultural land that participates in New York State LIP may qualify for an agricultural assessment if such land continues to be used “for the production for sale of crops, livestock, or livestock products” (AML, § 301(4)), or if the land use restrictions of the applicable LIP Site Management Plan, which prevent the continuation of agricultural production, constitute a set-aside for an eligible “federal conservation program” (AML, § 301(4)(e)).
New York State LIP “is funded by a grant from the Department of the Interior, United States Fish and Wildlife Service (USFWS)”. {2} The New York State Department of Environmental Conservation [DEC], which administers New York State LIP, has begun “two initial projects, approved for implementation by the USFWS, . . . for the protection of grassland birds and management of their habitat and for the protection of at-risk bat species.” A landowner who enrolls in New York State LIP will be required to execute a State Assistance Contract that may commit the landowner “to provide grassland habitat on a portion of the Property (referred to as the ‘Site’) for the period of this Agreement, in accordance with the Site Management Plan . . .” (Article 3 of the applicable State Assistance Contract, a copy of which was provided by DEC). It is our understanding that a landowner who chooses to participate in New York State LIP may be, but is not required to be, a commercial farmer. A DEC representative also informed us that Section 4 of the LIP Site Management Plan shows that mowing/haying will be one of the key management actions. Neither DEC nor the USFWS restricts the sale of hay coming from a LIP-enrolled field.
It appears that LIP Site Management Plans generally would be consistent with the commercial growing of hay for sale or as feed for a farm operation’s livestock. Accordingly, there may be factual situations where agriculturally productive land may participate in New York State LIP and qualify for an agricultural assessment as part of a commercial farm whose “crops, livestock or livestock products” have an “average gross sales value” that is sufficient to comply with AML, section 301(4).
While the two initial New York State LIP Site Management Plans appear to allow a participating property’s use for commercial agricultural purposes, this may not be the case for every plan. If an approved LIP Site Management Plan prohibited commercial agricultural activity on the encumbered land, it is our opinion that the affected land would not be eligible for an agricultural assessment as “set-aside” land because New York State LIP is not a “federal conservation program . . . established for the purposes of replenishing highly erodible land which has been depleted by continuous tilling or [for] reducing national surpluses of agricultural commodities” (AML, § 301(4)(e); cf., 10 Op.Counsel SBRPS No. 57, which is our opinion concerning the agricultural assessment eligibility of land enrolled in the Federal Conservation Reserve Program [CRP]).
We have been advised that landowners whose lands participate in New York State LIP apparently may apply for financial incentives (currently of $55 or $60 per acre) to conduct the prescribed site management. Since we conclude that New York State LIP does not constitute a federal “set-aside” program for purposes of AML, section 301(4)(e), it is also our opinion that any payments landowners receive from New York State LIP as incentives for wildlife conservation may not be included in the calculation of the farm operation’s “gross sales value” (cf., AML, § 301(9)(e)). Consequently, lands that participate in New York State LIP may only qualify for an agricultural assessment if the agricultural production of those lands constitutes being “used in agricultural production” (AML, § 301(4)), notwithstanding LIP’s wildlife conservation incentive payments.
February 1, 2007
{1} AML, section 301(4)(e), provides that an eligible “set-aside” occurs “through participation in a federal conservation program pursuant to title one of the federal food security act [of 1985] or any subsequent federal programs established for the purposes of replenishing highly erodible land which has been depleted by continuous tilling or reducing national surpluses of agricultural commodities. . . .”
{2} The United States Department of the Interior has described LIP and other similar wildlife protection programs as being “designed to allow interested landowners to fashion a conservation strategy that is consistent with their land management objectives” (“Working Together, Tools for Helping Imperiled Wildlife on Private Lands”). Such grants are “[f]or expenses necessary to carry out the Land and Water Conservation Fund Act of 1965, as amended (16 U.S.C. § 460l-4 through 11), including . . . private conservation efforts to be carried out on private lands . . .”