Volume 9 - Opinions of Counsel SBEA No. 6
Agricultural exemption (agricultural production requirement) (fish farm operation) - Agricultural and Markets Law, §§ 301, 305; Real Property Tax Law, § 481:
A fish farm is not used for agricultural production within the meaning of Article 25AA of the Agriculture and Markets Law and may not receive an agricultural value assessment. Land used for agricultural production which is converted to use as a fish farm would be subject to roll-back taxes.
An owner of land located within an agricultural district is planning to begin a catfish raising operation. To do so, the landowner must remove top-soil and many yards of clay to create ponds in which the catfish will be raised. We are asked (1) whether this is an agricultural operation; (2) whether the land may receive an agricultural value assessment; (3) which agricultural values to apply if the land qualifies for an agricultural value assessment; and (4) if this is not an agricultural operation, whether roll-back taxes should be imposed. For the reasons that follow, we believe that the operation of a “fish farm” is not an accepted use for purposes of the Agricultural Districts Law and that the property may be liable for roll-back taxes.
“Land used in agricultural production” within the meaning of section 301(4) of the Agriculture and Markets Law may receive an agricultural value assessment and a partial exemption from real property taxation (Agriculture and Markets Law, §§ 305(1)(a), 306(1); RPTL, § 481). Land is considered to be “used in agricultural production” if:
1) it consists of 10 acres or more;
2) it has been used during the preceding two years for the production for sale of crops, livestock, or livestock products of an average gross sales value of $10,000 or more over that time; and
3) it is located in an agricultural district or subject to an eight-year commitment to continued agricultural production.
The phrase “crops, livestock and livestock products” is defined by section 301(2)(e) of the Agriculture and Markets Law as including, “but not limited to: livestock and livestock products, including cattle, sheep, hogs, goats, poultry, fur bearing animals, milk, eggs and furs.” Whether catfish farms fall into this open-ended definition is answered by consideration of the nature of this operation and the purpose of the Agricultural Districts Law.
Aquaculture has been described as “the cultivation of the natural produce of water” (Webster’s New Collegiate Dictionary, G.C. Merrian and Co. (1981)). Clearly, the activity of raising fish is an aquacultural rather than an agricultural pursuit, which requires cultivation and use of land (see, 3 C.J.S. Agriculture, § 2, p.524). Although some statutes broadly define agriculture to specifically include aquaculture, {1} the Agricultural Districts Law (Article 25AA) does not. In fact. Article 25 of the Agriculture and Markets Law provides distinct definitions of agricultural commodities, aquaculture and aquatic products (Agriculture and Markets Law, §§ 293(1), 293(1-a), 293(1-b)).
We should also consider the general purpose of the Agricultural Districts Law, which is to “encourage the development and improvement of . . . agricultural land . . .” (Agriculture and Markets Law, § 300; emphasis added). The agricultural value assessment program specifically protects agriculture by protecting productive agricultural land. Aquaculture, in contrast, requires access to water rather than soil to thrive (New York Sea Grant Institute, Aquaculture Development in New York State (1985), p.16). Therefore, providing the benefit of the agricultural value assessment to fish farming would not directly promote the purpose of the law. Indeed, we note that the farmer must remove topsoil to create fish ponds. Finally, the New York Sea Grant Institute, in its final report on aquaculture development in New York, indicated its understanding that aquaculture activity is not protected by the Agricultural Districts Law:
Under the Agriculture and Markets Law, the creation of special agricultural districts to encourage the continued farming of valuable agricultural lands provides benefits to farmers of reduced real property tax assessments as well as relief from some local land use restrictions and regulations (Agriculture and Markets Law, sections 301, 303, 305). Furthermore, the definition of agriculture in this law serves as the basis of the definition of agriculture for purposes of Suffolk County development rights laws. Suffolk County, in order to preserve its farmlands, has purchased the development rights to tracts of land, in the County, including a few parcels with waterfront that are used for aquaculture. Future development of these lands is restricted to agriculture as defined in the Agricultur[al] Districts Law.
At present, the agricultural districting law does not include aquaculture within the definition of agriculture. As a result, for example, aquaculturists have been restricted from using a number of waterfront sites in Suffolk County otherwise designated for agricultural use (Aquaculture in New York, (supra), p.35; emphasis added.)
As a general rule of construction, statutes exempting real property from taxation must be strictly construed against the property owner seeking such exemption, although construction should not be so narrow as to defeat their settled purpose (City of Lackawanna v. State Board of Equalization and Assessment, 16 N.Y.2d 222, 212 N.E.2d 42, 264 N.Y.S.2d 528 (1965); Association of the Bar of the City of New York v. Lewisohn, 34 N.Y.2d 143, 313 N.E.2d 30,356 N.Y.S.2d 555 (1974)). The purpose of the Agricultural Districts Law is to protect farmland. Pursuit of aquaculture, it seems, could at best only incidentally serve this purpose, and may actually destroy productive land. Therefore, it is our opinion that production of catfish does not qualify as agricultural production for purposes of the Agricultural Districts Law.
Accordingly, in response to the first three questions presented, it is our opinion that (1) this is not an “agricultural operation”; (2) the land is therefore not eligible for an agricultural value assessment; and (3) there is no need to consider the application of agricultural values.
In regard to the possible imposition of a roll-back tax in this case,“ [i]f any land located within an agricultural district utilized for agricultural production is converted to a use other than [for] agricultural production [i.e., the production for sale of crops, etc.] . . . ”the portion so converted is subject to roll-back taxes (Agriculture and Markets Law, § 305(1)(d)).
In 6 Op.Counsel SBEA No. 66, we stated that conversion to use for purposes other than for agricultural production occurs when there is “some outward act, indicating that the property is in fact or in the process of being converted”. {2} Whether a conversion has occurred is a determination to be made on a case-by-case basis by the assessor.
Having stated our opinion that use of the land for production of catfish is not agricultural production within the meaning of the Agricultural Districts Law, we must also conclude that land which received the benefit of an agricultural value assessment and which has changed from the production for sale of crops to the production for sale of aquatic products has been converted to a use for other than agricultural production. Accordingly, it is our opinion that such property would be subject to roll-back taxes.
March 11, 1987
NOTE: But see L.1990, c.251. RPTL, § 481 (L.1987, c.774 amended L.1988, c.736) provides that land used in agricultural production as that term is defined in Agriculture and Markets Law, § 301 shall be assessed and taxed as provided in Agriculture and Markets Law, Article 25AA. Commencing with this opinion, we will cite the cross reference to RPTL, § 481.
{1} For example, the Federal Fair Labor Standards Act defines agriculture as including fish farming activities (29 USCS § 203(f); 29 CFR § 780.109).
{2} See also section 301(8) of the Agriculture and Markets Law (as amended by L.1988, c.736) which defines conversion for all land used in agricultural production under Article 25AA as “an outward or affirmative act changing the use of agricultural land and shall not mean the nonuse or idling of such land.”