By KIM SMITH DEDAM
---- — ESSEX — A tax grievance against the Town of Essex contests a $1.25 million increase in the Lewis Family Farm property assessment.
Unresolved since 2011, the matter is now lodged in Essex County Supreme Court as an Article 7 challenge by farm owner Salim B. “Sandy” Lewis relating to valuation of property and buildings on the property in Essex.
26 PERCENT INCREASE
Pending resolution of the 2011 grievance, Lewis said in a recent interview, a second one was filed this year.
Tax data on the consolidated 1,111.12-acre farm property shows the town’s assessment rose from $2.95 million in 2004 to $4.78 million in 2007.
Essex assessors revalued the property again, to $6.03 million, in 2009 — a 26 percent jump in two years.
The increase, in part, reflects the addition of farmworker housing that Lewis Farm attorney Martina Baillie says is unfinished but assessed at full value.
The farm’s property-tax bill went from $19,188 in 2005 to $30,507 in 2011, according to tax records.
A similar increase in assessment occurred at the Lewis farmhouse and barn on 5.2 acres, which was revalued from $292,000 in 2004 to $413,000 in 2009.
The property is located on land zoned for agricultural use in the Champlain Valley. Lewis believes the Town of Essex has not applied the farm exemption in assessment review.
Its challenge is now parsing agricultural exemption and the vagary of farm-use definition found in law.
Valuation, Baillie said, has to reflect the economics of the 1,100-acre parcel with a working farm on it.
To get at the legal facts, she said, Lewis Farm hired two “agricultural” appraisers to test the town’s assessment.
“An appraisal looks at two approaches: land-sales comparison versus a cost approach,” Baillie explained.
“There is a third, income-capitalization approach, but that is more complicated with a start-up company.”
The crux of contention stems from the manner in which exemptions were applied — or not applied — to farm-use structures.
Baillie is building her case from Real Property Tax Law defining 10-year and permanent agricultural tax exemption.
“The government says farm-grain or forage-crop structures are not taxable; neither are handling facilities,” Baillie explained.
“The provision for 10-year exemption speaks about sale of agricultural products. But we aren’t selling hay. The Lewis Family Farm has handling facilities and granary structures that have been taxed by the Town of Essex.”
Lewis asserts forage storage areas are not taxable.
“In our case, the barns are, in fact, storage. We store the straw. We store the hay. When you are a grass-fed farm operation — and we’re USDA certified grass-fed beef — we store grass in units that will feed 24 animals in one unit. We’re making food here. Our product isn’t taxed.”
The law applies directly to two new barns built on the Lewis Farm in 2011 with values given by town assessors at almost a $200,000 increase.
“Those are handling facilities that shouldn’t be taxed,” Baillie said.
The tax complaint also challenges valuation of two unfinished farmworker houses assessed for full residential use, Lewis said, even though there is no electrical service or plumbing in them.
Lewis said the town assessors didn’t visit the property or walk through the structures.
FARM HIRES APPRAISER
An appraiser hired by Lewis Family Farm initially valued the land, its buildings and farm housing at $1.8 million total, a number nearly $4 million less than the assessed value given by the town.
“The town is so dysfunctional in its approach to this tax work that the best chance we had to get any kind of progress was to allow the town’s attorney, Mark McNamera, an opportunity to see the farm appraiser’s work,” Lewis said of the ongoing process.
Court documents show that the town has offered to drop the main farmhouse property value to $129,000 and the farmland and attendant farm structures’ value to $2.3 million.
COST TO TOWN
Essex Town Supervisor Sharon Boisen would not discuss the assessment issue.
“When it comes to litigation, it is not something we would discuss in a public meeting,” she said, directing questions to McNamera, a partner at Hiscock & Barclay in Buffalo.
“It is pending litigation, and I don’t have any comment either,” McNamera said when asked about the town’s position on the Article 7 case.
“The parties are in discussions. The case is pending before Judge (Richard) Meyer.”
Boisen said the town has spent $61,544 year-to-date on the tax litigation.
Baillie asserts the farm will pursue a legal decision.
“The town could not explain what sales they used to come up with the $6 million number in the first place,” she said.
“And there are a couple of legal issues that do deserve to be determined in front of a judge. The first seeks a clarification in real-property tax statutes that address 10-year exemptions on structures and permanent exemptions.
“‘Permanent’ talks about structures ‘permanently affixed’ that are designed to ‘preserve and store forage in edible condition,’ including commodity sheds and manure storage facilities,” Baillie said.
“Ten-year (exemptions) are ‘structures and buildings and portions thereof’ used exclusively for storage of agricultural commodities for sale. There is potential overlap. I think it is important because these structures are being taxed all over the state. The problem I think you have is there are structures that have more than one use.”
And, she said, there is also no definition in tax law of “commodity.”
“If we were selling our hay, this might be a different issue,” Baillie said.
The farm is seeking to solve the taxation equation in a manner extending beyond the three-year protection offered to an assessment after litigation.
Email Kim Smith: firstname.lastname@example.org