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Assessor's Manual, Volume 4, Exemption Administration

Exemption Administration Manual - Part 2
Agricultural and Forest

Section 4.08 - Ag-Mkts L Section 305

Agricultural Districts
(Formed by county or New York State)

Exemption Code(s):     41720 Year Originally Enacted:    1971

Related Statutes:     Ag-Mkts L § §301, 303, 304, RPTL §582

SUMMARY:     This statute provides various benefits to farm property located in an agricultural district formed by a county or New York State. The benefits include two provisions relating to the taxation of land used in agricultural production: (1) an agricultural assessment of the land and (2) an exemption from certain special ad valorem levies and special assessments.

  1. Agricultural Assessment -- Certain agricultural land is eligible for an agricultural assessment. Agricultural assessment values are established annually by the NYS Office of Real Property Tax Services (ORPTS) using a capitalized value of production methodology. Any assessed valuation of the eligible land in excess of its agricultural assessment is exempt from taxation. To qualify, the owner must annually submit an application verifying that the land is located within an established agricultural district and that it satisfies the property use requirements described below. (Note: Similar lands outside of agricultural districts may qualify for agricultural assessment under Ag-Mkts L §306 -- see the Exemption Profile for that statute.)

    If converted to a use inconsistent with agricultural production, land that benefited from an agricultural assessment is subject to payments, as described under Payments in Lieu of Taxes below.

  2. Special Ad Valorem Levies and Special Assessments --
    1. As provided in Ag-Mkts L §305(5), land used primarily for agricultural production and located within an agricultural district is also exempt from special ad valorem levies, special assessments and other rates or fees imposed within improvement districts or areas deemed benefited by municipal improvements including, but not limited to, improvements for sewer, water, lighting, non-farm drainage, and solid waste disposal and other landfill operations (including solid waste management facilities established pursuant to County Law 226-b). The exemption also applies to farm structures located in an agricultural district, but not if the structure benefits directly from the services of the improvement district. The exemption does not apply in cases where such charges were imposed prior to the formation of the agricultural district. Nor is this exemption applicable to land of up to ½ acre surrounding any dwelling or non-farm structure. (Note: Land which is located within an agricultural district and is used primarily for agricultural production but which does not satisfy all of the requirements for an agricultural assessment may receive the benefit of this exemption.)
       
    2. As provided in Ag-Mkts L §305(6), the governing body of a fire, fire protection, or ambulance district for which special ad valorem levies or special assessments are made may adopt a resolution allowing the use of agricultural assessments in the levy of such charges.
  1. ELIGIBILITY REQUIREMENTS:
    1. Ownership Requirements:     None.
       
    2. Property Location Requirements:     The land must be located in an agricultural district established in accordance with the provisions of Article 25AA of the Agriculture and Markets Law.
       
    3. Property Use Requirements:     The land must be "land used in agricultural production," which for purposes of determining eligibility for an agricultural assessment is defined as:
       
      1. (1) Seven or more acres of land used as a single operation in the preceding two years for the production for sale of crops, livestock, or livestock products having an average annual gross sales value of $10,000 or more; (2) seven or more acres of land used in the preceding two years to support a commercial horse boarding or commercial equine operation with annual receipts of $10,000 or more; or (3) less than seven acres of land used as a single operation in the preceding two years for the production for sale of crops, livestock, or livestock products having an average annual gross sales value of $50,000 or more. In addition, land under a structure within which crops, livestock, or livestock products are produced is also included in the definition of "land used in agricultural production" provided the crops, livestock, or livestock products produced in the structure have an average gross sales value of $50,000 or more. Land used for the processing or retail merchandising of such crops, livestock, or livestock products is not considered to be "land used in agricultural production."

        "Gross sales value" means the proceeds from the sale of crops, livestock, and livestock products, plus any payments received by reason of land set aside under certain federal conservation programs (see provisions in part l, below), and any payments received from the New York State Thoroughbred Breeding and Development Fund (see Racing, Pari-Mutuel Wagering and Breeding Law §247). Crops include but are not limited to field crops, fruits, vegetables, maple sap, maple syrup processed from maple sap, Christmas trees, and horticultural specialties (including nursery stock and ornamental shrubs, trees, and flowers), honey, beeswax, royal jelly, bee pollen, propolis, nucs, queens, actively managed log-grown woodland mushrooms, aquacultural products (fish, fish products, water plants, and shellfish) and woody biomass (defined as short rotation woody crops used for bioenergy, excluding farm woodland).

        Examples of livestock and livestock products are cattle, sheep, hogs, goats, horses, poultry, ratites (such as ostriches, emus, rheas and kiwis), farmed deer, farmed buffalo, fur bearing animals, wool bearing animals (such as alpacas and llamas), milk, eggs, and furs. Also qualifying for inclusion in gross sales value are proceeds from the sale of honey and beeswax which are produced as part of an otherwise qualified farm operation which does not independently satisfy the gross sales requirement. Proceeds from the sale of woodland products (logs, lumber, posts, and firewood) from eligible land may be included to satisfy the average gross sales value requirement up to a maximum annual amount of $2,000, and also proceeds from the sale of compost, mulch or other organic biomass crops produced on land used in agricultural production (as defined above), in conformance with Agricultural and Markets Law §301(16), up to a maximum annual amount of $5,000.

        Note: Whenever a crop is processed before sale, the proceeds must be based on the market value of the crop in its unprocessed state.

      2. Seven or more acres of land used as a single operation for the production for sale of crops, livestock, or livestock products, exclusive of woodland products, which does not independently satisfy the gross sales requirement but has been used in such production for the preceding two years and is currently being so used under a written rental arrangement of five or more years in conjunction with land which is eligible for an agricultural assessment.
         
      3. Seven or more acres of land, either owned or rented, and used as a single operation in its first or second year of agricultural production for either (a) the production for sale of crops, livestock and livestock products with an annual gross sales value of $10,000 or more; or ( b) supporting a commercial horse boarding operation with an annual gross sales value of $10,000 or more. Qualifying gross receipts of a commercial horse boarding operation include fees generated through the boarding of horses, the sale of crops, livestock, and livestock products, or through both.  Notwithstanding the above, a commercial horse boarding operation that is proposed in its first or second year of operation may qualify as a farm operation if it is an agricultural enterprise, consisting of at least seven acres and boards at least ten horses, regardless of ownership, by the end of the first year of operation. Note: Commercial horse boarding operations excludes operations whose primary on site function is horse racing.    
         
      4. Less than seven acres of land used as a single operation for the production for sale of crops, livestock or livestock products with an annual gross sales value of $50,000 or more, if such land is owned or rented by a farm operation in its first or second year of agricultural production.
         
      5. Land situated under a structure within which crops, livestock or livestock products are produced provided that the crops, livestock or livestock products produced within the structure have an annual gross sales value of  (1) $10,000 or more, when the structure is part of a farm operation in its first or second year of agricultural production that owns or rents seven or more acres of land in agricultural production.
         
      6. Land situated under a structure within which crops, livestock or livestock products are produced provided that the crops, livestock or livestock products produced within the structure have an annual gross sales value of $50,000 or more, when the structure is part of a farm operation in its first or second year of agricultural production that owns or rents less than seven acres of land in agricultural production.
         
      7. Seven or more acres of land used as a single operation for the production for sale of orchard or vineyard crops when such land is used solely for the purpose of planting a new orchard or vineyard, and when such land is also owned and rented by a newly established farm operation in its first, second, third or fourth year of agricultural production.
         
      8. Seven or more acres of land used as a single operation for the production and sale of Christmas trees when such land is used solely for the purpose of planting Christmas trees that will be made available for sale, whether dug for transplanting or cut from the stump, and when such land is owned or rented by a newly established farm operation in its first, second, third, fourth, or fifth year of agricultural production.
         
      9. Eligible farm woodland,  which is defined as land used primarily for the production of woodland products intended for sale. Farm woodland eligible for an agricultural assessment must be part of land which qualifies for an agricultural assessment and must not exceed 50 acres on any separately described and assessed parcel.
         
      10. Land used in support of a farm operation or land used in agricultural production where such support land constitutes a portion of a parcel, as identified on the assessment roll, which also contains land qualifying for an agricultural assessment. Such land includes land used for agricultural amusements which are produced from crops grown or produced on the farm, provided that such crops are harvested and marketed in the same manner as other crops produced on such farm. Such agricultural amusements include, but are not limited to, so-called "corn mazes" or "hay bale mazes".  Examples of support land include land under and surrounding buildings such as barns, silos, and tenant housing for regular and full-time employees, but not land supporting the residence of the owner of the land (including a shareholder, partner, or participating member of a corporation, partnership, or other legal entity which owns the land). Other examples of support land are farm ponds, swamps used for drainage, land used for erosion control, hedgerows, and access roads.
          
      11. Land set aside through participation in a federal conservation program for the purposes of replenishing highly erodible land or reducing national surpluses of agricultural commodities. Examples of such programs are the Conservation Reserve Program (CRP) and the Acreage Conservation Reserve (ACR) program established by the Federal Food Security Act of 1985. For land set aside under these provisions, no minimum gross sales value is required.
          
      12. Land used to support an apiary products operation owned by the operation and (1) consists of not less than seven and not more than ten acres used as a single operation in the preceding two years to produce for sale crops, livestock or livestock products with an average gross sales value of $10,000 or more; or (2) less than seven acres used as a single operation in the preceding two years to produce for sale crops, livestock or livestock products with an average gross sales value of $50,000 or more. The land used to support an apiary products operation may include the land under a structure within which apiary products are produced, harvested and stored for sale, and a buffer area maintained by the operation between the operation and adjacent landowners.  Note: Rented land associated with an apiary products operation is not eligible for an agricultural assessment based on this paragraph.
         
      13. Land located in an agricultural district rented and used by a not-for-profit institution for the purposes of agricultural research that is intended to improve the quality or quantity of crops, livestock or livestock products. Note: No minimum gross sales value or acreage is required to qualify such land for this exemption
         
      14. Seven acres or more of land used by a commercial equine operation with an annual gross sales value of $10,000 or more, regardless of ownership. Qualifying gross annual receipts of a commercial equine operation include fees generated through commercial equine activities including, but not limited to riding lessons, trail riding activities or training of horses, through the production for sale of crops, livestock and livestock products, or through both. Notwithstanding the above, a commercial equine operation that is proposed in its first or second year of operation may qualify as a farm operation if it is an agricultural enterprise, consisting of at least seven acres and stables at least ten horses, regardless of ownership, by the end of the first year of operation. Note: Commercial equine operations exclude operations whose primary on site function is horse racing.
         
      15. Land, up to ten fenced acres per large livestock (including cattle, horses, and camelids) and up to five fenced acres per small livestock (such as sheep, hogs, goats and poultry) that is used in silvopasturing.  Silvopasturing shall mean the intentional combination of trees, forages, and livestock managed as a single integrated practice for the collective benefit of each.  This includes the planting of appropriate grasses and legume forages among trees for sound grazing and livestock husbandry. 

      It is important to note that, while farm woodland and support land may qualify for an agricultural assessment, such land may not be counted toward satisfaction of the seven-acre minimum requirement.

      Land used for non agricultural purposes does not qualify for an agricultural assessment. Non agricultural land includes any land that is not actually being used as described in (a) through (n) above. Examples of non agricultural land include land used for: homestead, commercial gravel (or other mineral, oil, or natural gas) extraction, wind energy production, recreation (such as camping, athletic, and park facilities), retailing, processing, and land used exclusively for hunting or game preserves.

    4. Certification by State or Local Government:     Prior to filing of the initial application for agricultural assessment, the landowner must have the Soil and Water Conservation District office in the county prepare a soil group worksheet (NYS Department of Agriculture and Markets Form APD-1) for each parcel to be enrolled in the agricultural assessment program. The worksheet classifies the property into the appropriate valuation categories used in the agricultural assessment program.
       
    5. Required Construction Start Date or Other Time Requirement:     None.
       
  2. LOCAL OPTION:     The governing body of a fire district, fire protection district or ambulance district which was formed prior to the formation of the agricultural district in which the agricultural land is located and for which special ad valorem levies and special assessments are imposed may adopt a resolution allowing the use of agricultural assessments in the levy of such charges on such agricultural land (see E. Calculation of Exemption below).
     
  3. LIMITATION ON EXEMPTION:    
       General
    Municipal
    Taxes
    School
    District
    Taxes
    Special
    Ad Valorem
    Levies
    Special
    Assessments
    1. Amount Yes* Yes* Yes** Yes**
    2. Duration No
    limit
    No
    limit
    No
    limit
    No
    limit
    3. Taxing Jurisdiction
    a. County or County
    Special Districts
    Ex NA Ex** Ex**
    b. City Ex NA NA Tax
    c. Town or Town
    Special District
    Ex NA Ex** Ex**
    d. Village Ex NA NA Tax
    e. School District NA Ex NA NA
      Ex-Exempt      Tax-Taxable      NA-Not Applicable

    * Exemption is limited to the assessed valuation in excess of the agricultural assessment of the land calculated by the assessor (see Calculation of Exemption below).

    ** Exemption is limited to land primarily used for agricultural production and exemption applies to special ad valorem levies, special assessments and other rates or fees imposed within improvement districts or areas deemed benefited by municipal improvements for purposes including sewer, water, lighting, non-farm drainage, or solid waste disposal or other landfill operations (including solid waste management facilities established pursuant to County Law §226-b). (See Calculation of Exemption below for more details.)

  4. PAYMENTS IN LIEU OF TAXES: None required.

    However, certain penalty payments are required if land that benefited form an agricultural assessment is converted to a use inconsistent with agricultural production. Except as provided below, if any portion of the land is voluntarily converted to a use other than agricultural production, that portion becomes subject to payments equal to five times the taxes saved in the last year in which land benefited from the exemption plus 6% interest compounded annually up to five years.1 No payments are required: (1) if agricultural land is converted to use for oil, gas, or wind energy exploration, development or extraction, (2) if the land is taken by eminent domain or other involuntary proceeding other than a tax sale, or (3) if the land is encumbered by a conservation easement conveyed from New York City to New York State, which prohibits future agricultural use.

  5. CALCULATION OF EXEMPTION:
    1. General Municipal and School District Taxes: 100% of assessed value of the eligible land in excess of the agricultural assessment.2 It should be noted that where orchards, vines, and support structures exist on qualified land no additional assessments can be made to reflect these items since they are considered to be included in the agricultural assessment values.

      Calculation of the exemption is facilitated by pages 4 and 5 of the application form, Form RP-305 or Form RP-305-r-ws for renewal properties. (Samples of these forms follow this Exemption Profile.)

      Structures used on land used in agricultural production must be assessed at an amount not to exceed the cost of replacement new at current prices less a deduction for (a) physical depreciation calculated in accordance with Assessor's Manual Volume 7, distributed by ORPTS, and (b) if applicable, functional and economic obsolescence. Such structures are those used:

      1. For the production or storage of crops, livestock, or livestock products as defined under Property Use Requirements above.
      2. For the storage of equipment and/or supplies used in agricultural production.
      3. In whole or in part as farm labor dwellings, except for structures used as the principal residence of the owner of the structure.
      4. For on-farm processing or on-farm retail merchandising, provided that at least 75% of the annual volume of such processing or merchandising uses crops, crop products, livestock, or livestock products, as defined under Property Use Requirements above, produced on land comprising one distinct agricultural operation.
         
    2. Special Ad Valorem Levies and Special Assessments: 100% of assessed value (or other basis of assessment) of land used primarily for agricultural production and in an agricultural district, except for the value of a lot of up to ½ acre surrounding any dwelling or non-farm structure located on such land and also excluding any farm structure that benefits directly from the service of the improvement district involved. The exemption applies only to special ad valorem levies, benefit assessments and other rates or fees imposed within improvement districts or areas deemed benefited by municipal improvements for purposes such as sewer, water, lighting, non-farm drainage, or solid waste disposal or other landfill operations. No such exemption is allowed where such charges were imposed prior to the formation of the agricultural district.

      The governing body of a fire, fire protection, or ambulance district which was formed prior to the formation of the agricultural district in which the agricultural land is located and for which special ad valorem levies and special assessments are imposed may adopt a resolution allowing the use of agricultural assessments in the levy of such changes on such agricultural land.  If such local option applies, the exemption is calculated as described under General Municipal and School District Taxes above.

  6. CODING OF EXEMPTION ON ASSESSMENT ROLL:
    Code Description of Alternative Codes Possible
    41720   

    Assessment Roll Section(s): Taxable (RPS Section 1).

    NOTE: This code should not be used to identify property that is exempt under any of the statutes listed under Similar Exemptions below. For coding of such property, see the Exemption Profile for the statute that applies.

  7. FILING REQUIREMENTS (Owner or Occupant of Property):
    1. One of the following two forms must be submitted annually for each separately assessed parcel included in the farm property:
      1. Form RP-305  - Agricultural Assessment Application

        Form required in the first year of exemption and in any subsequent years in which changes have occurred in the condition of the parcel. In addition, the form must be accompanied by a Soil Group Worksheet (Ag-Mkts Form APD-1(12/97)) and a soil map prepared by the Soil and Water Conservation District office, unless as a result of a prior application the assessor already has a worksheet and map which accurately describe the parcel.

      2. Form RP-305-r  - Agricultural Assessment Renewal Application (a worksheet for the assessor, Form RP-305-r-ws, is also provided)

        Form RP-305-r may be used only if the last form RP-305 or RP-305-r filed was approved and the parcel's status has not changed since approval. If changes in the parcel status have occurred, a new form RP-305 must be filed.

    2. In addition, one or more of the following supplemental forms may be required depending on the characteristics of the property in question:
      1. Form RP-305-b  - Application for Exception from Minimum Average Sales Value Requirement of Article 25-AA of the Agriculture and Markets Law

        Form required when sales value is insufficient because of extraordinary circumstances (i.e. acts of God, natural disasters, or continued adverse weather conditions).

      2. Form RP-305-c  - Agricultural Assessment Written Lease Affidavit for Rented Land
         
      3. Form RP-305-e  - New Orchards and Vineyards

    Applications generally must be filed on or before taxable status date.

    Exception #1: in the year of a revaluation or update of assessments, the application may be filed with the assessor no later than the thirtieth day prior to the day by which the tentative assessment roll is required to be filed by law.

    Exception #2: in the case of land located within an agricultural district, the application may be filed with the assessor no later than the last date on which an assessment complaint may be filed whenever the owner is unable to file the application by taxable status date because of the death of the applicant's spouse, child, parent, brother or sister, of an illness of the applicant or the applicant's spouse, child, parent, brother or sister, as certified by a licensed physician, or due to the occurrence of a natural disaster, including, but not limited to, a flood, or the destruction of the applicant's residence, barn or other farm building by wind, fire or flood. Note: The applicant should prove the farm's casualty loss resulting from the natural disaster by providing appropriate supporting documents to the assessor, such as a copy of an insurance claim application or a fire investigator's report.

  8. REPORTING REQUIREMENTS (Assessor):
    1. Form RP-305-a - Agricultural Assessment Notice of Approval or Denial of Application for 20__

      Form must be sent to landowners who included a self-addressed, pre-paid envelope with their applications at least 10 days prior to the date for hearing complaints in relation to assessments.

    2. Form RP-305-d - Agricultural Assessment Application Modification - Transmittal Memorandum

      Form to be sent to either the landowner or the Soil and Water Conservation District office when certain errors are found in an application.

    3. Form RP-305-L  - Agricultural Assessment Notice of Conversion and Payment Due

      Form RP-305-p-rev  - Agricultural Assessment Payment Calculation Worksheet

      These two forms are to be sent to the landowner when there is liability for payments resulting from the conversion of land enrolled in the agricultural districts program. The landowner must be notified of such liability at least 10 days prior to the date for hearing complaints in relation to assessments.

    4. Form RP-305-pr  - Agricultural Payment Report

      Form to be sent to ORPTS for each parcel subject to a payment for conversion within 45 days following the date on which the final assessment roll is required to be filed.

       

  9. SIMILAR EXEMPTIONS:
    Subject Statute
    Agricultural land outside agricultural districts Ag-Mkts L §306
    Farm or food processing labor camps or commissaries RPTL §483-d
    Farm silos, farm feed grain storage bins,
        commodity sheds, bulk milk tanks and coolers,
        and manure storage and handling facilities
    RPTL §483-a
    Historic barns RPTL §483-b
    Replanted or expanded orchard and vineyard land Ag-Mkts L §305(7)
    Structures and buildings essential to the operation
        of agricultural and horticultural lands
    RPTL §483
    Temporary greenhouses RPTL §483-c

Exemption Application Forms:

RP-305 RP-305-r
RP-305-r-ws RP-305-b
RP-305-c RP-305-a
RP-305-d RP-305-e
RP-305-L RP-305-p-rev
RP-305-pr RP-305-pr-Ins

1 Conversion is defined by law as "an outward or affirmative act changing the use of agricultural land." Nonuse of agricultural land does not constitute conversion.

2 The agricultural assessment is determined annually by multiplying the number of eligible acres by the appropriate ORPTS agricultural assessment values and the latest state equalization rate or special equalization rate. The special equalization rate is to be used where such a rate has been established as a result of a change in the level of assessment of all other property in the assessing unit. If the rate exceeds 100, a special equalization rate of 100 will be certified by ORPTS for use in calculating the agricultural assessment. (The maximum allowable change in the value of the base agricultural assessment value is limited to two percent of the value of the preceding year).

More information on assessment of agricultural properties is available here.

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