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Cash Crops

by Jessica Beym

For decades, the Farmland Assessment Act was abused by those looking for a tax break. With recent changes to the law, is it enough to keep “fake farmers” from raking in the dough?

New Jersey has long been called the Garden State, but if it were to lose its farms, it would likely lose its moniker. That’s why, 50 years ago, voters were asked to approve a change to the constitution that would encourage farms to stay in business and keep them from selling their precious land to developers.¬

But ever since the Farmland Assessment Act was passed in 1964—which established a new assessment for qualifying farmland that allowed owners to pay much less in real estate taxes than a residential property—there hadn’t been many changes to the way the program was handled.

That was, until a few of New Jersey’s own well-known politicians and celebrities were being criticized on the campaign trail, in the Statehouse and in the media for alleged abuses of the Farmland Assessment Act.

Were Bruce Springsteen, Jon Bon Jovi and U.S. Rep. Jon Runyan truly farmers? According to the tax breaks they were receiving on land they own in New Jersey, they were.

The 50-year-old law dictated that anyone with five acres of land who made at least $500 in profit a year through agricultural means—be it selling hay, wood or even honey from bees—could apply and qualify for the tax break.

Assemblywoman Pamela Lampitt, D-6 of Cherry Hill, says some of the abuses of the decades-old law is what caught the attention of various legislators in New Jersey, including Assemblyman Tony Singleton, D-7, of Mount Laurel.

“I think there are people who have utilized this law not for the original intent,” Lampitt says, adding there were many loopholes in the existing legislation that the lawmakers aimed to close.

Four years in the making, legislation that changes the Farmland Assessment Act was finally signed into law by Gov. Chris Christie in April. Advocates of the legislation, including the New Jersey Farm Bureau and the legislators who supported the bill, say it’s a step in the right direction. But opponents, such as the New Jersey Sierra Club and some of the farmers affected by the changes, have differing opinions.

One of the most noted revisions to the law is to increase the minimum income for a farm to qualify from $500 to $1,000 per year, plus $5 for every additional acre or 50 cents if the additional acre is woodland or wetland. It also requires property owners to meet stricter standards when applying, to prove farming is the main use of their land, and will require tax assessors to undergo training to properly identify farmland.

In the process of developing the new law, legislators received feedback from the farming community, including the N.J. Farm Bureau, and based some of the revisions on a study conducted by Rutgers University in 2008 that discussed the impacts the bill would have, depending on how it was modified. Some critics, including N.J. Sierra Club Executive Director Jeff Tittel, feel the revisions don’t go far enough. “It doesn’t get to the real abuses that are out there,” Tittel says, adding that with the rate of inflation, a $500 profit in 1964 would be more like $10,000 today—a number he believes would have been more appropriate as a threshold.

According to the Farmland Assessment Study conducted by Rutgers, more than half of the 566 municipalities in New Jersey have acreage under the farmland assessment program—more than one million acres total.

Increasing the income threshold to $1,000 a year will cause 47,000 acres of land to not be eligible any more, including 1,979 acres in Gloucester County, 1,783 acres in Burlington County and 526 acres in Camden County. Had the limit been raised to $10,000, nearly 400,000 acres—or 39 percent of the land in the program—would have been disqualified.

Ed Wengryn, research associate at the N.J. Farm Bureau, says the changes that were made had to be sensible.

“The idea was to find that balanced approach to making changes that would be responsible. It’s easy for people to say $1,000 on five acres isn’t a lot of income but the truth of the matter is one of the holdbacks was the commodity prices on such thing as hay, soy beans and corn. Some of those farmers are only making $700 or $800 on a five-acre parcel.”

While those types of farmers don’t exist as much in South Jersey, where we’re known largely for growing seasonal produce, the hilly acres of North Jersey are populated with these types of commodity farmers, Wengryn says.

Now incorporated into the law will be a requirement for that income threshold to be evaluated every three years, according to Singleton.

“There were folks who thought if you go too high, there would be legitimate farmers that would have been disqualified,” he says.

Another critical element to the bill will aid the municipalities in determining which land should qualify. Wengryn said the definition of farming is debatable for some, pointing to an example in which a tax assessor was faced with a landowner who had five acres but farmed just 10 peach trees that netted a $500 a year profit. “How is that active agriculture?” Wengryn asks. “The appellate division would say, ‘Well he’s got five acres and $500 income, so approve him.’”

According to Terri Paglione, tax assessor for Mount Laurel, the more information she has from the state to determine who qualifies, the easier it will be for her to do her job. In Mount Laurel, currently about 50 properties qualify for farmland assessment, including Runyan, who owns about 23 acres of land and about 20 of them qualify. Paglione says Runyan’s property is mostly wetlands but it fits into the assessment program—and will likely continue to qualify if he applies—because Runyan’s wooded acreage is part of a woodland management plan in which a forester determines which trees to cut down each year and which ones to replant. The ones that are cut are then sold for a profit. The new legislation doesn’t change the income levels for woodland properties.

“If they meet the qualifications, I don’t see why it’s a problem just because the person is running for Congress or is a celebrity,” Paglione offers.

Tittel says while there are some elements of the reform that are positive—such as creating a $5,000 penalty for those who defy the law—“it doesn’t change the basic problems and bigger abuses we have,” he says, pointing to situations like corporate office parks that use a small patch of land to grow soybeans and still qualify for the assessment.

“By keeping in a lot of these loopholes, it still means the rest of us have to pay. When they don’t pay, we pay.”

Published (and copyrighted) in South Jersey Magazine, Volume 10, Issue 3 (June, 2013).
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