Tax stuff I think is interesting. It is either copied from my primary blog on forbes.com http://www.forbes.com/sites/peterjreilly/ or stuff that I did not put there because being on forbes is a good gig and they have, you know, standards. Also some guest posts.
Monday, August 25, 2014
No Agricultural Exemption for Beehives on Cell Tower Property
Originally Published on forbes.com on November 15th,2011
It is fairly common for states and localities to tax farm land at a more favorable rate than other property. This will of course then lead to the question of whether property that the owner maintains is a farm really is a farm. A case in the New Jersey Tax Court this summer – Atlantic Coast LEH LLC v Township of Little Egg Harbor – concerned this issue. For some odd reason I find it amusing. Here is the story:
The question before the court is whether plaintiff’s approximately twelve-acre, mostly vacant plot of land, on which is located a 290-foot, income-generating, cellular communications tower, qualifies for farmland assessment pursuant to the Farmland Assessment Act of 1964. The property is put to dual uses. In addition to collecting rent from the operation of the cellular tower, which occupies less than an acre, but stretches approximately 25 stories into the sky, the property owner pays an out-of-state beekeeper to maintain beehives on the property for the production of honey, wax and other products. The bees forage on plants scattered throughout the lot. The beekeeper purchases from the property owner all the apiary products the bees make on the property for amounts just above the statutory minimum for farmland qualification. The small amount collected for the bees’ products consistently results in a financial loss to the taxpayer.
In 2003, Atlantic Coast contacted Wilson’s Honey, LLC, an apiary farming entity located in upstate New York, to initiate beekeeping operations at the subject property. After Walter Wilson, the proprietor of Wilson’s Honey, examined the property he authorized his company to construct eight beehives which were placed inside the fenced-in area with the cellular tower. It was necessary to place the beehives within the fenced-in area to provide protection from bears that roam the subject property. In a certification that was not refuted by the township, Mr. Wilson attested to seeing the bees foraging on blueberry bushes, clover, and knapweed throughout the 12.24 acres that comprise the subject property.
Atlantic Coast pays Wilson’s Honey annually for the care and maintenance of the bees on the subject property and for harvesting honey, beeswax and other products. The record contains no evidence with respect to how often employees of Wilson’s Honey travel to the property from New York to tend to the bees and collect bee products. From 2003 to the present Wilson’s Honey purchased from Atlantic Coast all the products generated by bees on the subject property at amounts that barely satisfy the statutory requirements for farmland assessment. There is no indication in the record that Wilson’s paid market rate for the apiary products, how the sales price was negotiated, or whether Atlantic Coast offered the products for sale to any other entity..
Finally, the municipality does not dispute the taxpayer’s contention that the entire property is used for apiary activity. The beehives are located on the property and the record contains an unrefuted certification from Mr. Wilson that he has witnessed bees foraging throughout the property. There is nothing in the record to suggest that the bees forage on property other than the subject property, although there is legal precedent from this court suggesting that bees forage between one and four miles from the location of their hives. Brighton, supra, 22 N.J. Tax at 46-47 ; Wyer, supra, 16 N.J. Tax at 548 (Tax 1997) (holding lot seeded with clover not qualified for farmland assessment because taxpayer produced no evidence that the parcel was needed for production of honey in hives on neighboring lot and where it was probable that bees foraged on other parcels); Barrett v. Borough of Frenchtown, 6 N.J. Tax 558, 564 (Tax 1984) )(holding that five-acre lot not qualified for farmland assessment where bees occasionally foraged for nectar on both the subject property and adjoining property). In light of the municipality’s concession and the Wilson certification, the credibility of which the court has no cause to doubt, the court concludes that the entire subject property is used for apiary activity.
Although the record is silent with respect to the costs incurred in erecting the structure, it would be reasonable to conclude that the construction and installation of a 290-foot tower equipped to transmit cellular telephone communications for multiple carriers represents a significant capital expenditure. AC Communications thereafter was granted a ground lease for the tower and associated structures and now enjoys a revenue stream from licensing the use of the tower and pays a significant annual rent to Atlantic Coast. It was only after approval of the cellular tower enterprise that Atlantic Coast contacted Wilson’s Honey to initiate apiary activities on the property.
In addition, operation of the cellular tower dominates over the beekeeping activity on the property. From a physical perspective, the cellular tower and associated buildings occupy a small portion of the parcel. While plaintiff argues that the height of the tower is irrelevant to the court’s consideration, the existence of a 290-foot high structure on the property solely for cellular communications purposes cannot be overlooked. By its sheer size the tower dominates the physical aspects of the property. The entire 12.24, otherwise vacant, acres were certainly a primary consideration of zoning officials when deciding whether to issue the variances necessary to install the structure. The beekeeping activities, on the other hand, are carried out in eight beehives. Although the record is silent with respect to the size of the beehives, the parties agree that all of the hives are contained within the chain-linked fence encompassing the cellular tower. It is reasonable to draw an inference from the record that the tower dwarfs the beehives. The Court concluded that the primary use of the property was the cell tower and that the property did not qualify as agricultural.