A5403

An Act concerning the use of tax and estate planners for farmland preservation purposes, and amending P.L.1983, c.32 and P.L.1988, c.4.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 24 of P.L.1983, c.32 (C.4:1C-31) is amended to read as follows:

24. a. Any landowner applying to the board to sell a development easement pursuant to section 17 of P.L.1983, c.32 (C.4:1C-24) shall offer to sell the development easement at a price which, in the opinion of the landowner, represents a fair value of the development potential of the land for nonagricultural purposes, as determined in accordance with the provisions of P.L.1983, c.32 (C.4:1C-11 et al.).

b. Any offer shall be reviewed and evaluated by the board and the committee in order to determine the suitability of the land for development easement purchase. Decisions regarding suitability shall be based on the following criteria:

(1) Priority consideration shall be given, in any one county, to offers with higher numerical values obtained by applying the following formula:

nonagricultural - agricultural - landowner's

developmental value value asking price

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nonagricultural - agricultural

development value value

(2) The degree to which the purchase would encourage the survivability of the municipally approved program in productive agriculture; and

(3) The degree of imminence of change of the land from productive agriculture to nonagricultural use.

The board and the committee shall reject any offer for the sale of development easements which is unsuitable according to the above criteria and which has not been approved by the board and the municipality.

c. (1) Two independent appraisals paid for by the board shall be conducted for each parcel of land so offered and deemed suitable. The appraisals shall be conducted by independent, professional appraisers selected by the board and the committee from among members of recognized organizations of real estate appraisers. The appraisals shall determine the current overall value of the parcel for nonagricultural purposes, as well as the current market value of the parcel for agricultural purposes[. The], and the difference between the two values shall represent an appraisal of the value of the development easement.

(2) If Burlington County or a municipality therein has established a development transfer bank pursuant to the provisions of P.L.1989, c.86 (C.40:55D-113 et seq.) or if any county or any municipality in any county has established a development transfer bank pursuant to section 22 of P.L.2004, c.2 (C.40:55D-158) or the Highlands Water Protection and Planning Council has established a development transfer bank pursuant to section 13 of P.L.2004, c.120 (C.13:20-13), the municipal average of the value of the development potential of property in a sending zone established by the bank may be the value used by the board in determining the value of the development easement.

(3) If a development easement is purchased using moneys appropriated from the fund, the State shall provide no more than 80[%] percent, except that 100[%] percent may be provided under emergency conditions specified by the committee pursuant to rules or regulations, of the cost of the appraisals conducted pursuant to this section.

d. Upon receiving the results of the appraisals, or in Burlington county or a municipality therein or elsewhere where a municipal average has been established under subsection c. of this section, upon receiving an application from the landowners, the board and the committee shall compare the appraised value, or the municipal average, as the case may be, and the landowner's offer and, pursuant to the suitability criteria established in subsection b. of this section:

(1) Approve the application to sell the development easement and rank the application in accordance with the criteria established in subsection b. of this section; or

(2) Disapprove the application, stating the reasons therefor.

e. Upon approval by the committee and the board, the secretary is authorized to provide the board, within the limits of funds appropriated therefor, an amount equal to no more than 80[%] percent, except that 100[%] percent may be provided under emergency conditions specified by the committee pursuant to rules or regulations, of the purchase price of the development easement, as determined pursuant to the provisions of this section. The board shall provide its required share and accept the landowner's offer to sell the development easement. The acceptance shall cite the specific terms, contingencies and conditions of the purchase.

f. The landowner shall accept or reject the offer within 30 days of receipt thereof. Any offer not accepted within that time shall be deemed rejected.

g. Any landowner whose application to sell a development easement has been rejected for any reason other than insufficient funds may not reapply to sell a development easement on the same land within two years of the original application.

h. No development easement shall be purchased at a price greater than the appraised value determined pursuant to subsection c. of this section or the municipal average, as the case may be.

i. The appraisals conducted pursuant to this section or the fair market value of land restricted to agricultural use shall not be used to increase the assessment and taxation of agricultural land pursuant to the "Farmland Assessment Act of 1964," P.L.1964, c.48 (C.54:4-23.1 et seq.).

j. (1) In determining the suitability of land for development easement purchase, the board and the committee may also include as additional factors for consideration the presence of a historic building or structure on the land and the willingness of the landowner to preserve that building or structure, but only if the committee first adopts, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations implementing this subsection. The committee may, by rule or regulation adopted pursuant to the "Administrative Procedure Act," assign any such weight it deems appropriate to be given to these factors.

(2) The provisions of paragraph (1) of this subsection may also be applied in determining the suitability of land for fee simple purchase for farmland preservation purposes as authorized by P.L.1983, c.31 (C.4:1C-1 et seq.), P.L.1983, c.32 (C.4:1C-11 et seq.), and P.L.1999, c.152 (C.13:8C-1 et seq.).

(3) (a) For the purposes of paragraph (1) of this subsection: "historic building or structure" means the same as that term is defined pursuant to subsection c. of section 2 of P.L.2001, c.405 (C.13:8C-40.2).

(b) For the purposes of paragraph (2) of this subsection, "historic building or structure" means the same as that term is defined pursuant to subsection c. of section 1 of P.L.2001, c.405 (C.13:8C-40.1).

k. The committee may establish and maintain a list of tax and estate planners located in the region, or hire a dedicated pool of tax and estate planners, or both, who are appropriately licensed, certified, or otherwise qualified to provide tax and estate-related guidance, advice, and assistance to landowners in the State, in association with the development of agreements providing for the transfer of development easements on farmland, pursuant to this section, on an installment purchase basis; and the committee or board, and any landowner offering or considering offering a development easement on farmland for sale pursuant to this section, shall be authorized to select and utilize any tax or estate planner identified on the committee’s list or included as a member of the committee’s pool, in order to:

(1) determine whether, and the extent to which, it is feasible and in the parties’ best interests to proceed with the transfer of the development easement on an installment purchase basis, taking into consideration all of the potential and actual federal, State, and local tax and estate-related concerns and implications associated therewith, as identified by the planner and the parties; and

(2) if the transfer of the development easement on an installment purchase basis is determined to be feasible and appropriate, identify and recommend, for inclusion in the final and negotiated installment purchase agreement, the specific contractual terms and provisions necessary to address all relevant tax and estate-related concerns and issues, and provide other advice and assistance necessary to facilitate and ensure the effective structuring of the final and negotiated installment purchase agreement, for tax and estate purposes.

(cf: P.L.2004, c.120, s.44)

2. Section 5 of P.L.1988, c.4 (C.4:1C-31.1) is amended to read as follows:

5. a. Any landowner of farmland within an agricultural development area certified by the committee may apply to the committee to sell the fee simple absolute title at a price which, in the opinion of the landowner, represents a fair market value of the property.

b. The committee shall evaluate the offer to determine the suitability of the land for purchase. Decisions regarding suitability shall be based on the eligibility criteria for the purchase of development easements listed in section 24 of P.L.1983, c.32 (C.4:1C-31) and the criteria adopted by the committee and the board of that county. The committee shall also evaluate the offer taking into account the amount of the asking price, the asking price relative to other offers, the location of the parcel relative to areas targeted within the county by the board and among the counties, and any other criteria as the committee has adopted pursuant to rule or regulation. The committee may negotiate reimbursement with the county and include the anticipated reimbursement as part of the evaluation of an offer.

c. The committee shall rank the offers according to the criteria to determine which, if any, should be appraised. The committee shall reject any offer for the purchase of fee simple absolute title determined unsuitable according to any criterion in this subsection or adopted pursuant to this subsection, or may defer decisions on offers with a low ranking. The committee shall state, in writing, its reasons for rejecting an offer.

d. Appraisals of the parcel shall be conducted to determine the parcel’s fair market value [according to], in accordance with procedures adopted by rule or regulation [by] of the committee.

e. (1) The committee shall notify the landowner of the fair market value and negotiate for the purchase of the title in fee simple absolute.

(2) The committee may establish and maintain a list of tax and estate planners located in the region, or hire a dedicated pool of tax and estate planners, or both, who are appropriately licensed, certified, or otherwise qualified to provide tax and estate-related guidance, advice, and assistance to landowners in the State, in association with the development of agreements providing for the transfer of fee simple title to farmland, pursuant to this section, on an installment purchase basis; and the committee, and any landowner offering or considering offering fee simple title to farmland for sale pursuant to this section, shall be authorized to select and utilize any tax or estate planner identified on the committee’s list or included as a member of the committee’s pool, in order to:

(a) determine whether, and the extent to which, it is feasible and in the parties’ best interests to proceed with the transfer of the fee simple title on an installment purchase basis, taking into consideration all of the potential and actual federal, State, and local tax and estate-related concerns and implications associated therewith, as identified by the planner and parties; and

(b) if the transfer of such title on an installment purchase basis is determined to be feasible and appropriate, identify and recommend, for inclusion in the final and negotiated installment purchase agreement, the specific contractual terms and provisions necessary to address all relevant tax and estate-related concerns and issues, and provide other advice and assistance necessary to facilitate and ensure the effective structuring of the final and negotiated installment purchase agreement, for tax and estate purposes.

f. Any land acquired by the committee pursuant to the provisions of [this amendatory and supplementary act] P.L.1988, c.4 (C.4:1C-31.1 et seq.) shall be held of record in the name of the State and shall be offered for resale by the State, notwithstanding any other law, rule or regulation to the contrary, within a reasonable time of its acquisition with agricultural deed restrictions for farmland preservation purposes as determined by the committee pursuant to the provisions of [this act] P.L.1988, c.4 (C.4:1C-31.1 et seq.).

g. The committee shall be responsible for the operation and maintenance of lands acquired and shall take all reasonable steps to maintain the value of the land and its improvements.

h. To the end that municipalities may not suffer loss of taxes by reason of acquisition and ownership by the State of New Jersey of property under the provisions of [this act] P.L.1988, c.4 (C.4:1C-31.1 et seq.), the State shall pay annually on October 1 to each municipality in which property is so acquired and has not been resold a sum of money equal to the tax last assessed and last paid by the taxpayer upon this land and the improvement thereon for the taxable year immediately prior to the time of its acquisition. In the event that land acquired by the State pursuant to [this act] P.L.1988, c.4 (C.4:1C-31.1 et seq.) had been assessed at an agricultural and horticultural use valuation in accordance with provisions of the "Farmland Assessment Act of 1964," P.L.1964, c.48 (C.54:4-23.1 et seq.), at the time of its acquisition by the State, no rollback tax pursuant to section 8 of P.L.1964, c.48 (C.54:4-23.8) shall be imposed as to this land nor shall this rollback tax be applicable in determining the annual payments to be made by the State to the municipality in which this land is located.

All sums of money received by the respective municipalities as compensation for loss of tax revenue pursuant to this section shall be applied to the same purposes as is the tax revenue from the assessment and collection of taxes on real property of these municipalities, and to accomplish this end the sums shall be apportioned in the same manner as the general tax rate of the municipality for the tax year preceding the year of receipt.

(cf: P.L.2001, c.405, s.4)

3. This act shall take effect immediately.

STATEMENT

This bill would amend the State’s farmland preservation laws to authorize the State Agriculture Development Committee (committee) to establish and maintain a list of tax and estate planners located in the region, or to hire a dedicated pool of tax and estate planners, or both, in order to facilitate the acquisition of farmland, for preservation purposes, on an installment purchase basis.

The bill would require the committee to include, in its list or dedicated pool of tax and estate planners, only those tax and estate planners who are located in the region and are appropriately licensed, certified, or otherwise qualified to provide tax and estate-related guidance, advice, and assistance to landowners in the State, in association with the development of agreements authorizing the acquisition of farmland on an installment basis. The bill would further authorize the committee, as well as any local board or qualifying tax exempt nonprofit organization which is authorized to engage in the acquisition of farmland, and any landowner who is offering or considering offering farmland for sale for preservation purposes, to select and utilize any tax or estate planner identified on the committee’s list or included as a member of the committee’s dedicated pool, in order to:

1) determine whether, and the extent to which, it is feasible and in the parties’ best interests to proceed with the transfer of the development easement or fee simple title on an installment purchase basis, taking into consideration all of the potential and actual federal, State, and local tax and estate-related concerns and implications associated therewith, as identified by the planner and parties; and

2) if the transfer of such easement or title, on an installment purchase basis, is determined to be feasible and appropriate, identify and recommend, for inclusion in the final and negotiated installment purchase agreement, the specific contractual terms and provisions necessary to address all relevant tax and estate-related concerns and issues, and provide other advice and assistance necessary to facilitate and ensure the effective structuring of the final and negotiated installment purchase agreement, for tax and estate purposes.