Cornell study suggests farm exemptions lagging

By Matthew J. Perry
An ongoing study by Cornell Cooperative Extension suggests that Delaware County’s remaining farmers generally do not receive sufficient tax exemptions on prime soil and working land in general.
Study findings were presented at the county board of supervisors meeting on April 8. Amy Kenyon, who led the discussion, pointed out that agricultural exemptions are determined by individual assessors, and that oversights often are not due to systemic problems or biases in the state or county taxation methods.
Nevertheless, she stated that farms receive fewer exemptions than nonprofits and local government installations. Over 137,000 acres of the county’s farmland are covered by the agricultural exemption, Kenyon said, which amounts to 14.7 percent of the total county acreage. There are 153 farms that gross more than $100,000, and agricultural sales contribute an estimated $60-70 million to the local economy.
Kenyon said that oddities of the state’s real property laws account for some of the underassessment. Much, however, is due to incomplete municipal records and judgments made by assessors. Town assessors, who do not work in concert with counterparts in other districts, may also be hamstrung by a lack of current information and are wary that farmers are abusing the system.
Assessment “is not an exact science,” she said.
Farms often suffer, according the report, because their usable land is undervalued and their buildings are overvalued. Barns in particular are a source of high assessment, since they depreciate quickly, are often dilapidated or even hazardous, and add little to the current value of the property. Many farmhouses are also in disrepair, and in reality are less valuable due to their proximity to the noise and odors of farming. The result can be an imbalanced value ratio between buildings and land, which in turn can lead to a lesser exemption.
In one model, Kenyon showed that a 155-acre farm, with prime soils, two barns and a house could be given a fair market assessment of $570,000 — $415,000 coming from the buildings. The result would be an exemption of $350 an acre and $16,000 in total taxes. In this scenario, the land was assigned a value of $110 per acre.
Employing standards that the Cornell study judged as more equitable, the same farm would be assessed at $421,000; the land value would be increased to $1,750 per acre, the building’s value slashed to $150,000. The agricultural exemption would increase to $750 per acre while taxes would shrink to $9,000—a difference of $7,000.
“That’s a lot of money to a farmer,” Kenyon said. “In many years it can mean the difference between losing money and breaking even.”
Although findings are preliminary, the study includes recommendations for assessors and town officials as well as farmers. For those who receive the exemption advice can be simple: get informed, talk to town officials or the Cornell Cooperative Extension and learn how assessors are determining the value of farms, based upon current use. “Farmers need to learn the system their living under and avail themselves of the various tools,” said Davenport supervisor Dennis Valente.
Town supervisors are encouraged to update their data collection every three to five years, find property missing from tax rolls to make municipal assessment more equal, and employ agricultural specialists who can provide analysis.
The co-op will also encourage the state to provide baseline data to the county and change assessment guidelines so that full-time farmers will more easily secure higher exemptions on their land. “The exemptions should reflect [farms’] larger contribution to the local economy,” said Kenyon.