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Volume 2 - Opinions of Counsel SBEA No. 43

Opinions of Counsel index

Farm structures and buildings exemption (structure used for storage and processing of fruit; portion of structure leased) - Real Property Tax Law, § 483:

A structure erected on a fruit farm for cold storage of the fruit produced on the farm for sale through normal channels of an agricultural or horticultural operation is entitled to the tax exemption granted by section 483 of the Real Property Tax Law. If the structure is used to store fruit in a retail operation or if it is used for the processing of the fruit, it would not qualify for the exemption under section 483. Where a portion of the structure is leased for storage purposes of other fruit farmers, no exemption may be allowed on the leased portion.

Our opinion has been requested as to whether an exemption may be allowed under section 483 of the Real Property Tax Law where the owner of a large fruit farm erects a structure to be used for cold storage and for processing the fruit produced on his farm and fruit produced on other farms.

Section 483 provides for an exemption on structures and buildings essential to the operation of lands, not less than five acres in area, which for at least two consecutive years prior to the date of application for exemption have been actively devoted to agricultural and horticultural use, and presently are actually used and occupied to carry out such operation for profit. Such buildings must be constructed or reconstructed subsequent to January 1, 1969, and prior to January 1, 1979, in order to be exempt from taxation to the extent of any increase in the value of the agricultural or horticultural operation by reason of such construction or reconstruction. The period of exemption is limited to five years.

Subdivision 3 of section 483 provides, in part, that “[t]he term ‘structures and buildings’ shall include: (a) structures or 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 or buildings or portions thereof used for the processing of agricultural and horticultural commodities, or the retail merchandising of such commodities. . . .”

Lands actively devoted to the cultivation of fruit are clearly lands devoted to a horticultural use. The exemption authorized by section 483 applies to any structure or building erected on land meeting the other qualifications of the statute which is used directly and exclusively in the production of horticultural commodities, which include a structure or building necessary for the storage of such commodities. Thus, a structure necessary for the cold storage of fruit grown on a farm where such fruit is cultivated for sale through the normal channels of an agricultural or horticultural operation would be a structure entitled to exempt status within the intent of the exemption statute.

In view of the language of the statute, however, such structure would not qualify for exempt status if used to store fruit in a retail operation. Furthermore, no exemption could be allowed on a structure or portion thereof used for the processing of a horticultural commodity. Also, the fact that the owner of the fruit farm and the proposed structure intends to lease space in the structure for the use of other fruit farmers would tend to indicate that the proposed structure, at least to the extent of the leased space, is not essential to carry out the horticultural operation on which the claim for exemption is based. If this in fact were the case, it would appear that no exemption would be allowed on the portion so leased.

July 27, 1972