Source: https://tax.ny.gov/pubs_and_bulls/orpts/legal_opinions/v11/84.htm
Timestamp: 2018-02-24 21:49:30
Document Index: 718732631

Matched Legal Cases: ['§ 301', '§ 481', 'Art. 25', '§ 481', '§ 483', '§ 301', '§ 301', '§ 301', '§ 483', '§ 483', '§ 483', '§ 483', '§ 483', '§ 483', 'Art. 20', '§ 244', '§ 245', 'Art. 25', '§ 244', '§ 293', '§ 294']

Volume 11 - Opinions of Counsel SBRPS No. 84
Agricultural exemption (gross sales requirement) (honey); Farm structures and buildings exemption (agricultural use) (structure used for winter storage of bee hives) - Agriculture and Markets Law, § 301; Real Property Tax Law, §§ 481, 483:
Honey may be an eligible “crop” for the purposes of the agricultural assessment program when produced for sale by a qualified commercial farm, provided the farmer’s honey bee colonies are used in conjunction with the farmer’s agricultural land.
A building or structure used as winter storage for colonies of commercial honey bees that produce agricultural commodities for sale may qualify for the farm structures and buildings exemption if the assessor determines that the structure is essential to the operation of lands actively devoted to agricultural or horticultural use and that it is actually used and occupied to carry out such operation.
We have received related inquiries regarding the agricultural assessment program (Agriculture and Markets Law [AML], Art. 25-AA; RPTL, § 481) and the farm structures and buildings exemption (Real Property Tax Law, § 483). The first question is whether honey is considered an agricultural product for purposes of Article 25-AA’s $10,000 gross sales requirement, that is, whether honey qualifies as a “crop” for the purposes of the agricultural assessment program (AML, § 301 et seq.). The second question is whether a recently constructed controlled atmosphere storage facility constructed by a bee keeper for wintering his bee hives (for approximately three months per year) may qualify under section 483.
Neither honey nor bees are contained in the enumerated list of “crops, livestock and livestock products” set forth in AML, section 301(2). That omission is not controlling because a farm operation’s agricultural “gross sales value” may include “the proceeds from the sale of: *** [h]oney and beeswax produced by bees in hives located on an otherwise qualified farm operation ... which does not independently satisfy the gross sales requirement . . .” (AML, § 301(9)(c)). [Ed. note: Chapter 341 of the Laws of 2008 added a new AML, § 301(9)(j), providing that “apiary products,” which includes honey, constitute crops for purposes of the agricultural assessment program.]
Accordingly, it is our opinion that honey may be an eligible “crop” for the purposes of the agricultural assessment program when produced for sale by a qualified commercial farm. In such a situation, the farmer’s honey bee colonies must have a connection with the farmer’s agricultural land (e.g., when the farmer’s bee colonies also serve the function of pollinating the commercial crops grown on the farm’s agricultural land). [Ed. Note: In 2007, the law was amended to specifically provide that structures and buildings used in the production of honey and beeswax, including those structures and buildings used for the storage of bees, are eligible for exemption under section 483 of the Real Property Tax Law. RPTL § 483(2)(e) as added by Chapter 540 of the Laws of 2007.]
Addressing the exemption eligibility of the building, a partial tax exemption is afforded to eligible:
structures and buildings or portions thereof used directly and exclusively in the raising and production for sale of agricultural and horticultural commodities or necessary for the storage thereof, but not structures and buildings or portions thereof used for the processing of agricultural and horticultural commodities, or the retail merchandising of such commodities (RPTL, § 483(2)(a)).
It appears that the property owner’s use of this facility raises two issues for the assessor to resolve. First, the assessor must decide whether the bee hives that are stored in this facility are “used directly and exclusively in the raising and production for sale of agricultural and horticultural commodities” (RPTL, § 483(2)(a)). Second, the assessor must determine whether this structure or building is “essential to the operation of lands actively devoted to agricultural or horticultural use and actually used and occupied to carry out such operation” (RPTL, § 483(1)).
RPTL, section 483, does not state whether bee keeping and the production of honey may constitute a bona fide agricultural activity for the purpose of the farm structures and buildings exemption. As noted above, the AML, however, indicates that there are situations when bee colonies that produce honey and honey products are engaged in qualified commercial agribusiness activity. {1} Such also may be the case when a commercial beekeeper provides pollination services for a fee to farmers. {2}
Assuming that the assessor determines that this building or structure is used to house colonies of commercial honey bees that produce agricultural commodities for sale, the facility is eligible to receive the section 483 exemption only if the assessor also determines that the structure is “essential to the operation of lands actively devoted to agricultural or horticultural use and actually used and occupied to carry out such operation” (RPTL, § 483(1)). Such eligible agricultural land must consist of “not less than five acres in area actually used in bona fide agricultural and horticultural production and operation and carried on for profit” (RPTL, § 483(3)). We believe those five or more acres of agriculturally productive land also must be part of the same “stand alone” farm operation as this facility (10 Op.Counsel SBRPS No. 106). {3}
It appears that there are circumstances when such an operational connection might occur. For example, if the property owner’s farm operation cultivates five or more acres of crops or flowers for sale and/or as feed for the farm’s commercial livestock, such a productive association might exist if the honey bee colonies are used to pollinate those crops or flowers.
{1} In addition to AML, section 301(9)(c), discussed above, AML, Art. 20 (§ 244 et seq.), which is entitled “Licensing of Farm Products Dealers,” defines the term “farm products” as including “honey” (AML, § 245(1)). Similarly, AML, Art. 25 (§ 244 et seq.), which is entitled “Marketing of Agricultural Products,” defines “agricultural commodity” as including “bees” and “honey” (AML, § 293(1)). The New York State Commissioner of Agriculture and Markets has the power to enter marketing agreements with agricultural producers (AML, § 294), which may include agreements with commercial beekeepers whose colonies produce honey for sale. We have previously noted that, while we recognize that section 483 of the RPTL and the Agricultural Districts Law are separate laws, there is an “obvious relationship” between the two programs (10 Op.Counsel SBRPS No. 82).
{2} A report of March, 2000, entitled “The Value of Honey Bees as Pollinators of U.S. Crops,” written by Dr. Roger A. Morse and Dr. Nicholas W. Calderone of Cornell University, states “we estimate that there were 2,500,000 colonies rented for pollination purposes in 1998.” (That total of 2,500,000 colonies is limited to commercial beekeepers who own five or more colonies.) We note that their report also states “[o]ver two million of these colonies are on the road each year to pollinate crops and to produce honey and beeswax”).
{3} Section 483 does not state that a farm structure or building must be used throughout the year in order to receive tax exemption. The court in Lufkin v. Assessor of Town of Washington, 185 Misc.2d 779, 713 N.Y.S.2d 914 (Sup.Ct., Dutchess Co., 2000), decided that land supporting a commercial horse boarding operation was entitled to an agricultural assessment pursuant to section 305 of the AML notwithstanding the fact that the horses were boarded in that location for only part of the year, because “[t]here is no statutory requirement that the horse boarding be a year-round activity” (185 Misc.2d at 784, 713 N.Y.S.2d at 918). Accordingly, based on the Lufkin decision, it would appear that this structure may be eligible for exemption, notwithstanding the fact that the bees would be housed therein for only three months of the year.