Opinion
Docket No. 012281-2010
02-14-2013
Re: Richard and Marie Bailey v. Township of Franklin
Richard Bailey Marie Bailey Britt J. Simon, Esq. The Law Office of Britt J. Simon
NOT FOR PUBLICATION WITHOUT APPROVAL OF
THE TAX COURT COMMITTEE ON OPINIONS
Patrick DeAlmeida
Presiding Judge
Richard Bailey
Marie Bailey
Britt J. Simon, Esq.
The Law Office of Britt J. Simon
Dear Mr. and Mrs. Bailey and Mr. Simon:
This letter constitutes the court's opinion after trial of the above-referenced matter. For the reasons explained more fully below, the court adjusts the municipal tax assessor's award of farmland assessment for tax year 2010 to include 38.27 acres of plaintiffs' real property. The court's decision increases by one acre the amount of land granted farmland assessment by the assessor.
I. Findings of Fact and Procedural History
The facts are not complicated. Plaintiffs own 39.27 acres of real property in defendant Franklin Township, Hunterdon County. The property, which is commonly known as 579 Pittstown Road, is designated by the township as Block 42, Lot 3 and Lot 3 Qualifier 0227. For many years, 38.27 acres of the parcel were assessed as farmland pursuant to the Farmland Assessment Act of 1964. N.J.S.A. 54:4-23.1, et seq.
On July 2, 2009, plaintiffs filed an application for farmland assessment of the subject property for tax year 2010. The application described 38.27 acres of the property as actively devoted to farmland. The remaining acre was described as land under or used in connection with a farmhouse. Included in the 38.27 acres for which farmland assessment was sought were 6 acres of appurtenant woodlands or wetlands. The remainder of the property was used to grow hay, board horses and for other agricultural and horticultural pursuits.
Acting on instructions from the county board of taxation to examine carefully farmland assessment applications, the municipal tax assessor undertook an investigation of plaintiffs' use of the subject property. She credibly testified that her inquiry raised serious doubts that the property qualified for farmland assessment. See N.J.S.A. 54:4-23.2 (requiring that property be "actively devoted to agricultural or horticultural use . . . for at lease 2 successive years immediately preceding the tax year in issue" to qualify for farmland assessment); and N.J.S.A. 54:4-23.5 (requiring that farming activity on subject property produce an average of at least $500 in income per year during the two-year period immediately preceding the tax year in issue).
The assessor's investigation revealed that a hayfield on the property had been infiltrated by weeds, suggesting a lack of farming activity. In addition, a November 10, 2009 letter from a farmer who leased a portion of the property from plaintiffs stated that he was unable to harvest hay from the property "[d]ue to the very wet weather throughout the growing season" but that he intended to harvest hay "as soon as conditions permit." The assessor's requests to plaintiffs for evidence of the income derived from farming activity on the property went unanswered.
At the close of 2009 the assessor determined that the lack of evidence of farming activity on the subject property was sufficient to deny plaintiffs' farmland assessment application. However, in light of the fact that plaintiffs had long maintained a farm at the subject property, and given the assessor's recent increased scrutiny of farmland assessment applications, the assessor granted plaintiffs' application. She determined, however, that only 37.27 acres would be assessed as farmland. The assessor explained her decision as an effort to "get [plaintiffs'] attention" and to transmit the message that plaintiffs would "have to step up the activity and get the evidence [they] need to support" any future farmland assessment application. The exclusion of one acre from farmland assessment increased plaintiffs' local property tax bill by approximately $200.
At trial, the assessor could not identify any particular acre of the subject property she believed not to qualify for farmland assessment. She readily admitted that the motivation for her decision was not a determination that any portion of the property was no longer actively devoted to agricultural or horticultural use. She instead removed an acre from farmland assessment in an effort to underline her intention to require greater poof of farming activity in future years and to address in a measured manner her concerns regarding the level of farming at the subject property. The assessor expressed her desire to work with plaintiffs to increase farming at the property and to generate sufficient proof justifying farmland assessment without denying their application in its entirety.
Plaintiffs filed a Petition of Appeal with the Hunterdon County Board of Taxation challenging the assessor's decision. On May 7, 2010, the board issued a Judgment affirming the award of farmland assessment treatment to 37.27 acres of the subject property.
Plaintiffs thereafter filed a Complaint in this court seeking reversal of the county board judgment. A trial was held after the completion of discovery.
While this matter was pending, plaintiffs' tax year 2011 application for farmland assessment was granted for their entire 38.27-acre parcel. The assessor testified at trial that she was convinced that farming activity at the property increased during 2010 and that plaintiffs produced sufficient evidence in support of their tax year 2011 farmland assessment application to justify preferential treatment for the entire property.
II. Conclusions of Law
The court's analysis begins with the well-established principle that "[o]riginal assessments and judgments of county boards of taxation are entitled to a presumption of validity." MSGW Real Estate Fund, LLC v. Borough of Mountain Lakes, 18 N.J. Tax 364, 373 (Tax 1998). As Judge Kuskin explained, our Supreme Court has defined the parameters of the presumption as follows:
The presumption attaches to the quantum of the tax assessment. Based on this presumption the appealing taxpayer has the burden of proving that the assessment is erroneous. The presumption in favor of the taxing authority can be rebutted only by cogent evidence, a proposition that has long been settled. The strength of the presumption is exemplified by the nature of the evidence that is required to overcome it. That evidence must be "definite, positive and certain in quality and quantity to overcome the presumption."
[Ibid. (quoting Pantasote Co. v. City of Passaic, 100 N.J. 408, 413 (1985)(citations omitted)).]
The presumption of correctness arises from the view "that in tax matters it is to be presumed that governmental authority has been exercised correctly and in accordance with law." Pantasote, supra, 100 N.J. at 413 (citing Powder Mill, I Assocs. v. Township of Hamilton, 3 N.J. Tax 439 (Tax 1981)); see also Township of Byram v. Western World, Inc., 111 N.J. 222 (1988). The presumption remains "in place even if the municipality utilized a flawed valuation methodology, so long as the quantum of the assessment is not so far removed from the true value of the property or the method of assessment itself is so patently defective as to justify removal of the presumption of validity." Transcontinental Gas Pipe Line Corp. v. Township of Bernards, 111 N.J. 507, 517 (1988)(citation omitted).
The preferential tax treatment of farmland has its origin in the State Constitution. In 1960, the Legislature passed L. 1960, c. 51, which provided that "[i]n the assessment of acreage which is actively devoted to agricultural use, [taxable] value shall not be deemed to include prospective value for subdivisions or nonagricultural use." In Switz v. Kingsley, 37 N.J. 566, 582-586 (1962), the Supreme Court held that this statute violated the Uniformity Clause of the State Constitution, Art. VIII, §1, par. 1, which requires the application of the same standard of value to all real property for local property tax purposes. Id. at 585.
In response to the holding in Switz, the State Constitution was amended to provide that
[t]he Legislature shall enact laws to provide that the value of land, not less than 5 acres in area, which is determined by the assessing officer of the taxing jurisdiction to be actively devoted to agricultural or horticultural use and to have been so devoted for at least the 2 successive years immediately preceding the tax year in issue, shall, for local tax purposes, on application of the owner, be that value which such land has for agricultural or horticultural use.
[N.J. Const. Art. VIII, § 1, par. 1(b).]
The Farmland Assessment Act of 1964 was enacted to implement the Constitutional amendment. The statute authorizes preferential tax treatment for "land, not less than 5 acres in area, which is actively devoted to agricultural or horticultural use and which has been so devoted for at least the 2 successive years immediately preceding the tax year in issue . . . ." N.J.S.A. 54:4-23.2. Land is deemed to be in agricultural use "when devoted to the production for sale of plants and animals useful to man . . . or when devoted to and meeting the requirements and qualifications for payments or other compensation pursuant to a soil conservation program under an agreement with an agency of the federal government . . . ." N.J.S.A. 54:4-23.3. "Land shall be deemed to be in horticultural use when devoted to the production for sale of fruits of all kinds, including grapes, nuts and berries; vegetables; nursery, floral, ornamental and greenhouse products; or when devoted to and meeting the requirements and qualifications for payments or other compensation pursuant to a soil conservation program under an agreement with an agency of the Federal Government." N.J.S.A. 54:4-23.4. Land is deemed to be
actively devoted to agricultural or horticultural use when the amount of the gross sales of agricultural or horticultural products produced thereon, and payments received under a soil conservation program . . . have averaged at least $500.00 per year during the two-year period immediately preceding the tax year in issue, or there is clear evidence of anticipated yearly gross sales and such payments amounting to at least $500.00 within a reasonable period of time.
[N.J.S.A. 54:4-23.5.]
The court is presented with unusual circumstances. It may well be true that the tax assessor would have been warranted in denying entirely plaintiffs' application for farmland assessment for tax year 2010. It appears from the record that plaintiffs failed to produce sufficient evidence of agricultural or horticultural activity at the subject property during 2009 to justify farmland assessment for 2010. The assessor, however, did not make that determination. She instead granted plaintiffs' application but trimmed the land qualified for farmland assessment from 38.27 acres to 37.27 acres. At trial, the assessor did not attempt to identify the one acre she removed from farmland assessment. She candidly admitted that her decision was an attempt to get plaintiffs' attention and to spur greater farming activity at the subject property and the production of documentary evidence of farming income derived from the parcel.
The court appreciates the assessor's attempt to take a measured approach with a couple who have been farming the subject property for several decades. The county board instructions to assessors regarding farmland assessment resulted in increased scrutiny of plaintiffs' application. It is likely the assessor demanded greater evidence from plaintiffs than had previously been the case and they may have been unprepared to respond to her inquiries. It was reasonable for the assessor to attempt an approach that would underscore the need for plaintiffs to increase and document farming activity on the subject property.
The rub here is that the assessor's decision is not supported by law. The farmland assessment statutes authorize an assessor to investigate an application for farmland assessment and to make a determination of whether the property owner has provided sufficient evidence to warrant preferential treatment for the subject property. If the investigation reveals that farmland assessment is warranted, the assessor is authorized to grant the application. If the investigation results in insufficient evidence to support farmland assessment, the assessor is authorized to deny the application. Where the proofs establish that some, but not all, of the subject property is entitled to farmland assessment, the award of preferential treatment is tailored to cover only the property for which sufficient proof has been adduced.
There is, however, no statutory authority for an assessor to award farmland assessment to a parcel, but to trim the amount of property entitled to preferential treatment by an arbitrary amount in order to "get the attention" of the property owner. However well-meaning an assessor may be - and the court has no doubt that the assessor in this case was well-intentioned - an acre of land may not be removed from farmland assessment while the remainder of the parcel to which it is attached is granted farmland assessment in order to make the point that the taxpayers should increase their farming activity and garner better proof of farming income in future years. The assessor must make a determination of whether a parcel qualifies for farmland assessment or does not and act accordingly.
Here, the assessor decided that the subject property met the qualifications for farmland assessment for 2010. The court concludes that the assessor's justification for reducing the property allowed farmland assessment to 37.27 acres was not authorized by law and must be reversed. The irony may be that the assessor's decision had its intended effect, as the taxpayers satisfied the assessor that farmland assessment was warranted for the entire parcel for 2011. On the other hand, the assessor's attempt to engage the taxpayers in a non-confrontational manner resulted in a Tax Court appeal and trial over approximately $200 in local property taxes.
At the close of trial, the municipality argued that the taxpayers had, in effect, proven that they did not devote the entire parcel to agricultural or horticultural activity during 2009 and were, therefore, not entitled to farmland assessment for the entire 38.27 acres for tax year 2010. The municipality, however, did not appeal the grant of farmland assessment to 37.27 acres of the subject parcel for tax year 2010 nor file a counterclaim in this court. The court, therefore, makes no legal conclusions regarding the validity of the assessor's grant of farmland treatment to the 37.27 acres. The only question before the court is whether the tax assessor, having determined that the subject property was entitled to farmland assessment for tax year 2010, was authorized to reduce by one acre the amount of land so assessed in order to encourage plaintiffs to increase farming activity and to collect better evidence of farming income from the parcel.
The court will enter Judgment reversing the Judgment of the Hunterdon County Board of Taxation and granting farmland assessment to 38.27 acres of the subject property for tax year 2010.
Very truly yours,
Patrick DeAlmeida, P.J.T.C.