Column: Farm Tax Break May Wither
Senate committee approves a bill requiring greater sales to qualify for farmland assessment.
It may finally get a little harder for property owners to get a huge tax break for selling a few hundred dollars in Jersey tomatoes or stacks of firewood cut from their land.
Last Thursday, the Senate environment committee released a bill doubling the amount of income a landowner would have to get from his property to be eligible for the preferential farmland assessment. That’s only the first step in what could be a long road to enactment for the measure.
It’s unclear how many people would be impacted by the change because the state does not keep good records for the program.
An analysis of the state’s property database shows that almost 29,000 acres of land in Morris County are farmland assessed and the average assessment is $425, generating about $10 an acre in taxes. That’s a phenomenal discount in a wealthy, high cost county.
There are great benefits to the program. It keeps land open, which helps maintain lower levels of pollution and congestion, not to mention that open space is aesthetically pleasing. It also helps keep the garden in the Garden State and keeps farmers, some of whom struggle mightily to make ends meet, in business.
The law was enacted in 1964 to stem the loss of farm acres and help keep farming viable as the state got more developed and more congested.
There have been some tweaks, but the main regulations have not kept up with inflation in the intervening 48 years: A landowner still must have at least 5 acres devoted to farming or forestry and the sale of goods produced must total just $500.
The inflation rate over that time has risen more than sixfold, meaning that had it kept pace with inflation, that $500 threshold today would equal $3,711.
The legislation that cleared committee last week only seeks to double the threshold to $1,000 worth of vegetables or flowers or stacks of wood to continue to get the favorable low assessment.
That seems more than fair, particularly given that every $1 of tax break received by someone in the farmland assessment program must be made up by those who don’t own 5 acres that can generate income.
Should the bill pass and be signed by Gov. Chris Christie, it could potentially have the greatest impact in Washington Township.
According to the state database, more than 10,000 acres of land in the township are farmland assessed at an average value of $437 an acre. In 2010, those acres generated a total $103,000 in property taxes or about $10.20 per acre.
Consider that there were six 1-acre vacant, non-farm properties in the township last year with an average assessment was $54,883. They paid an average of $1,271 in taxes.
It’s no wonder that anyone with 5 acres tries to qualify for farmland assessment. And it’s not just people who benefit, but some companies, as well. Lincoln Park Airport, Ilac Realty and Hercules all own land assessed at low farm values.
Other municipalities have large chunks of farmland, including Chester Township, with 3,074 acres, and Mendham Township, with 1,437. Even well-developed Parsippany, at the intersections of Routes 80 and 287, had five farmland acres last year. Only one quarter of the county’s municipalities had no farm-assessed land.
The New Jersey Farm Bureau supports amending the law but wants to make sure that true farmers still get a preferential assessment so they can continue to make a living off the land.
That shouldn’t be a problem, given the $1,000 threshold would still be an even better deal than $500 was back when the program was enacted.
And making the program fairer would also be a good deal for land owners who might have to shoulder even a little less of the burden of other properties that are not paying their full weight of the state’s high property taxes.
Colleen O'Dea is a writer, editor, researcher, data analyst, web page designer and mapper with almost three decades in the news business. Her column appears Mondays.
This post is shared by several Patch sites serving communities in Morris and Sussex counties. Responses below may be by readers of any of those sites.
MTSO
2:09 am on Monday, May 21, 2012
It has been a scam for rich people to avoid taxes with this $500 per year . The downside of getting rid of it totally is over development. The compromise change should have been more in line with the rise of inflation... $3,711 per year.
roger freiday
8:43 am on Monday, May 21, 2012
This tax break is a good idea that has been perverted by those fortunate enough to have 5 or more acres - example, so-called WOOD LOTS, where, in Washington Twp you can clear cut with impunity, destroy your ''wood lot'', annoy the neighbors, create a swamp, and get rewarded for it ! Along with ''farmland assessment'' this town needs comprehensive TREE CUTTING RULES and I do not mean ''let the Highlands act'' dictate that, (like the Twp Committee has repeatedly stated) Our recent massive flooding was another result of a LOT of cutting in my neighborhood, often due to Twp approval of NON CONFORMING LOTS, along with the wood lot tax break. So, TOWNSHIP GOVERNMENT speak up and tell me why we do not make this happen ! I have presented this idea MANY times at Committee work sessions.
Gadfly
9:08 am on Monday, May 21, 2012
Mr. Freiday, It's my understanding that most tree ordinances exempt forestry activities conducted under an approved forest management plan. So, I don't think your proposal would address many of your concerns. I'd be interested to hear your thoughts as you've obviously spent some time on this issue.
Dan Grant
9:25 am on Monday, May 21, 2012
Some on the Biggest "Farmers" are simply developers and land speculators. In Montville Township one of the biggest 'Farmers" over the years is David Mendelbaum, developer. I doubt that he has ever been even on a real farm. The benefit is that people like him have no tax pressure to develope so they land bank. When they do develope they are assessed at the much higher rate going back 3 years. That number should be longer to create a disincentive to develope. Real Farmers are not effected by this at all.
Rich
9:56 am on Monday, May 21, 2012
The Senate might be trying to fix this, but Chatham Township is trying to bring it here. They just passed a farm ordinance in our township. It only applies to sixty properties which are owned by all the usual suspects you named in this article (real estate developers, wealthy landowners, corporations, etc.) To make it worse, they included a Superfund site in it. Oh and our Mayor voted for her property to get this benefit as well. Read more on our community blog at:
www.savegreenvillage.com
Claire
10:43 am on Monday, May 21, 2012
I would like to know who checks up on or approves this. I know several people in town who are "Farm" assessed, and I have been over their homes, no farm in site. They separate their land into several lots and then pay $76 taxes on 7 acres of property. What a deal???? Shame on them. Just because they have $$ to hire lawyers to set up all the loopholes for them Maybe Washington Twn tax assessors should check up on this.
Gadfly
1:19 pm on Monday, May 21, 2012
The tax payer has to file a farmland assessment application each year to get and maintain the property tax reduction. As part of the application, they need to submit proof of income to the township tax assessor. If it is a forested property, they also need to have a forest management plan prepared by a licensed forestor. In that case, the State Forest Service also checks to make sure that they are implementing their forest management plan.
Eileen Stokes
2:52 pm on Monday, May 21, 2012
Don't forget that the part of the farm that is developed or improved by house, garage, barn, etc. also pays the same tax assessment as everyone else in town. That is part of the reason behind separate lots--separate tax assessment. Other lot divisions sometimes go back generations to when lots were sold and acquired by past owners.
Jeff Grayzel
6:51 pm on Monday, May 21, 2012
I agree with the other commenters that this loophole as been abused my many. The $500 limit was a joke and the proposed $1,000 is almost as bad a joke as the existing law. You can get your brother to buy $1,000 worth of "farm goods" from you and the result is that you get (for example) a $5,000 tax break. The threshold to get the farmland assessment tax credit should be much closed to what the differential is between what a farmland assessment would save a landowner vs. what they would pay under a full assessment. In this case you could not have just one hard number, but it would vary from "farm" to farm.
Gadfly
7:19 pm on Monday, May 21, 2012
The real solution is not to increase the income requirement, but to make the program only available to "real" farmers. For years some people have suggested that the program should only be available to people that make some minimum percent of their income from agricultural activities.
Carolyn Hanington
3:31 pm on Tuesday, May 22, 2012
Jeff, you are right on the money. I would love our "real" farmers to have the program but homeowners should not be able to receive the break...it's not hard to tell the difference! Also, have had someone actually tell me that they have their brother write them a check for $500, he cashes it and gives the money right back! Outrageous..this issue has bugged me for a long time!
Dan Grant
4:41 pm on Tuesday, May 22, 2012
All the comments are true. It is a loophole that developers use to avoid large tax bills but it means that the developer will have a greater need to develope if a large tax is placed on the property. The devil is in the details. Right now a parcel that had been farm assessed and is now being developed only pay a 3 year penalty tax when the property is subdivided and developed. That isn't nearly long enough. A longer penalty period that grows for these "gentleman" farmers is the answer not a $500.00 increase in sales of produce or wood.
Cara DePalma
10:19 am on Thursday, May 24, 2012
If it benefits the wealthy I anticipate a quick veto from Governor Christie. It would be considered a tax increase and G-d forbid we do anything to close the revenue gap in NJ...
Mikey
11:38 am on Thursday, May 24, 2012
"... it keeps land open ..." - yeah, so Buffy and Todd can play croquet without listening to the traffic noise of the riff-raff on their way to work. This tax cut should be for actual, working farms only, or just cancel the whole thing.