Volume 8 - Opinions of Counsel SBEA No. 64
Agricultural exemption (qualified lands requirement) (rented land - eligibility of “other land”); (rental arrangement - rent payable in services) - Agriculture and Markets Law, § 301; 9 NYCRR 94.1, 194.8:
Rented land which does not satisfy the gross sales requirement for an agricultural value assessment must be used in conjunction with other land actually receiving an agricultural value assessment, not merely land which would be eligible for such an assessment, in order to receive an agricultural value assessment pursuant to section 301(3)(b) of the Agriculture and Markets Law.
Where a lease for farmland sets forth the rental in a dollar amount payable in specified services for rented land, such lease would satisfy the requirements of the Agricultural Districts Law.
Pursuant to an “oral arrangement”, a farmer uses his neighbor’s land to grow crops for use in connection with the farmer’s dairy operation. The oral arrangement provides for the farmer to use subject land in return for performing certain services in connection with other land owned by his neighbor. We are asked whether the farmer must apply for an agricultural value assessment for his land, in order for the neighbor to apply for an agricultural value assessment on the subject land. We are also asked whether requisite rental arrangement may specify payment in services for use of the subject land, rather than payment in cash.
The Agricultural Districts Law, Article 25AA of the Agriculture and Markets Law, provides that “land used in agricultural production” is eligible to receive an agricultural value assessment, which may result in a partial exemption from real property taxation, if such land is either located within an established agricultural district or subject to an eight year commitment to continued agricultural production. For this purpose, the term “land used in agricultural production” is generally defined in section 301(3) of Article 25AA as “Not less than ten acres of land used the preceding two years for the production for sale of crops, livestock or livestock products of an average gross sales value of ten thousand dollars or more.”
Section 301(3) also contains two specific provisions which define “land used in agricultural production” to include certain rented land. The first provides that “land used in agricultural production shall also include: . . . (a) rented land which otherwise satisfies the requirements for eligibility for an agricultural value assessment” (§301(3)(a)). This provision simply means that rented land which independently satisfies the statutory requirements is eligible to receive an agricultural value assessment subject to the following requirements:
(a) The rented land must consist of at least ten acres that were used in the preceding two years to produce crops, livestock or livestock products for sale.
(b) The crops, livestock or livestock products produced for sale on the rented land must have had an average gross sales value of at least $10,000 for the two years preceding the application.
(c) The rented land must either be located within an established agricultural district or subject to an eight year commitment to continued agricultural production.
Where rented land is used by a lessee to produce an intermediate agricultural product that is not actually sold, the gross sales requirement referred to above is not satisfied. This situation commonly occurs where rented land is used by a lessee to produce corn or hay that is fed to the lessee’s livestock. In this instance, the second provision in the Agricultural Districts Law concerning rented land provides that:
Land used in agricultural production shall also include . . . b. Land of not less than ten acres used for the production for sale of crops, livestock or livestock products, exclusive of woodland products, which does not independently satisfy the gross sales requirement, where such land was used in such production for the preceding two years and currently is being so used under a rental arrangement of five or more years in conjunction with land which qualifies for an agricultural value assessment. (§ 301(3)(b))
Thus, rented land that fails to satisfy the gross sales requirement may still be eligible to receive an agricultural value assessment if the following requirements are satisfied:
(a) The rented land must consist of at least ten acres that were used in the preceding two years for the production for sale of crops, livestock or livestock products, exclusive of woodland products.
(b) The rented land must currently be used to produce crops, livestock or livestock products, exclusive of woodland products, under a rental arrangement of five or more years.
(c) The rented land must be used in conjunction with other land which qualifies for an agricultural value assessment.
(d) The rented land must either be located within an established agricultural district or subject to an eight year commitment to continued agricultural production.
Under this second provision of the law, we believe that the requirement that rented land be used in conjunction with other land “which qualifies for an agricultural value assessment” means that the other land must actually be receiving an agricultural value assessment. In other words, before this type of rented land may be eligible to receive an agricultural value assessment, it must be ascertained whether the owner of the other land has also filed an application for an agricultural value assessment and whether that application has been approved.
The rules of the State Board of Equalization and Assessment concerning agricultural value assessments define a “rental arrangement” as a “written lease signed by both of the parties to the agreement” (9 NYCRR 194.1(q) (emphasis added)). The rules also provide that the landowner may demonstrate the existence of the requisite rental arrangement by submitting to the assessor either a copy of the lease or an affidavit attesting to its existence (9 NYCRR 194.8(b)(6)(i); see also, Form EA-305(c)).
The term “lease” is not defined in the State Board’s rules but has been defined by the courts of this State as “the transfer of absolute control and possession of property at an agreed rental” (Feder v. Caliguira, 8 N.Y.2d 400 at 404, 171 N.E.2d 316, 208 N.Y.S.2d 970 at 972 (1960)). Moreover, “[i]t is well settled that rent need not be money. It may consist of anything that is certain or capable of being made so by either party and it is held to be certain when the amount or quantity can be reduced to certainty by computation or proof” (Knepper v. Rothbaum, 104 Misc. 554, 172 N.Y.S. 109 at 110 (S.Ct., 1st Dept. 1918), citing: Smith v. Fyler, 2 Hill 648 (1842); Valentine v. Jackson, 9 Wend. 302 (1832); and Smith v. Colson, 10 Johns 91 (1813)).
In Smith v. Fyler, supra, the court held rent to be certain where a three year lease for a farm specified that the annual rental was three dollars per acre for all the improved land on the farm, payable in cash or by the lessee building a stone fence at one dollar per rod, or some combination of both. In Smith v. Colson, supra, the court held rent to be certain where a lease for a house specified that the lessee was to pay the lessor seventy dollars per annum, payable in repairs and improvements to be made to the premises.
Therefore, as long as a lease sets forth the rent in a dollar amount, the fact that the rental is payable by performance of specified services will not take the lease out of the “rental arrangement” requirements of the State Board’s rules. Accordingly, where a lease for farmland sets forth the rental in a dollar amount payable in specified services, such a lease would satisfy the requirements of the Agricultural Districts Law.
November 1, 1982
NOTE: This Opinion construes law prior to L.1997, c.357.
