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Volume 4 - Opinions of Counsel SBEA No. 86

Opinions of Counsel index

Agricultural exemption (gross sales requirement) (rented lands - lessor’s right to exemption) - Agriculture and Markets Law, §§ 305, 306:

The lessor of lands used in conjunction with another farm operation may be eligible for an agricultural value assessment on such rented land if the land independently satisfies the requirements of the Agricultural Districts Law.

We have received an inquiry concerning the Agricultural Districts Law (Article 25AA of the Agriculture and Markets Law). The facts are that a farmer grosses $33,000 annually in milk sales from a dairy operation conducted on 50 acres of his own land and 200 acres of rented land. He grows hay and corn on the rented land which he uses to feed his cows, and he estimates the value of the hay and corn to be in excess of $10,000 annually. The question is whether the lessor may be eligible for an agricultural value assessment on the 200 acres of the land rented to the farmer in his dairy operation based on the estimated value of the hay and corn.

The Agricultural Districts Law makes the following provisions in relation to rented lands. Identical provisions are contained in section 305 with respect to lands located within an agricultural district, and section 306 with respect to lands located outside of a district.

The gross sales value of agricultural products produced for actual sale on rented lands used in conjunction with an agricultural operation may be added to the gross sales derived from lands owned by a lessee to reach the $10,000 gross sales figure required by the law for eligibility for an agricultural value assessment. Where an agricultural product, such as the hay and corn in this example, is not produced for actual sale, but rather, is used to support the agricultural operation of the lessee, the value of the hay and corn may not be added to the gross sales of the dairy operation.

The lessor of lands used in conjunction with another farm operation may be eligible for an agricultural value assessment on such rented land subject to independent satisfaction of the law. In other words, the leased acreage would have to be not less than 10 acres used in agricultural production for the preceding two years and would have to independently produce agricultural products of a gross average sales value of $10,000 per year over the two preceding years. The owner of the leased land is not entitled to use gross sales derived from the lessee’s farm operation when computing the $10,000 gross sales figure. Only the gross sales derived from land owned by the lessor would be eligible.

The expressed intent of the law is to conserve and protect agricultural lands (§ 300). There is no requirement in the law that an owner-applicant of otherwise qualified land actually farm the land himself. Therefore, the apparent intention of the law is not to preclude the lessor in this factual situation from applying for an agricultural value assessment on the land owned by him and used in conjunction with the milk production operation, a defined agricultural product, provided that all the statutory requirements are satisfied with regard to the rented land. However, noting that the hay and corn produced on the rented land were not actually sold, but rather were used to feed the cows in the dairy operation, the problem is substantiating the value of the agricultural product actually produced on the rented land. In such situation, the burden is on the owner-applicant to prove that his rented land actually produced agricultural products of a gross sales value satisfying the statutory requirements. The determination as to whether an applicant has satisfied the requirements of the law and whether the land is eligible for an agricultural value assessment rests with the assessor. In this connection the assessor may demand from the applicant any reasonable proof necessary to make such determination which could include income statements, receipts, and in this situation, a statement from the lessee setting forth the actual quantitative production derived from the rented lands and possibly further substantiation from the Cooperative Extension Service relative to actual value.

March 31, 1975

Updated: