Legal Issues

Sec. 7-1-3 (c) of the City of Asheville UDO states, ”Bona fide agricultural use. The provisions of this chapter shall not apply to bona fide agricultural uses recognized as such for tax purposes by the State of North Carolina except that confined animal feeding operations shall be prohibited.”  I originally interpreted this to mean that if I could prove that the farm was a bona fide farm per the state definition (and qualified for tax purposes) I would be exempt.  The definition of a “bona fide” farm can be found in its updated form in NC General Assembly Session Law 2011-363 (House Bill 168) and it’s also discussed ad nauseum by the School of Government.

Given that this is not an outright recognition for tax purposes as required by the UDO, I also bolstered my understanding by the definition of the term agriculture under § 106‑581.1. Agriculture defined. Most pertinent to this situation, the statute defines agriculture as “The cultivation of soil for production and harvesting of crops, including but not limited to fruits, vegetables, sod, flowers and ornamental plants.” Now with respect to recognition for state tax purposes, I applied for and was granted a sales tax exemption for my farm related purposes under the provisions of § 105‑164.13. Retail sales and use tax. The application (an E-595EA from the NC Department of Revenue), listed my exemption as that of a farmer for the production of “Naturally grown produce, vegetable starts, and heritage poultry grown on locally cultivated urban infill plots.”

This is all further compounded by the fact that the City of Asheville passed a resolution on January 22, 2013 that stated the following goal (which was incorporated into the City’s Sustainability Management Plan)

Utilize the Unified Development Ordinance (UDO) as a tool to support food policy goals by amending the UDO as needed to remove barriers to local food production and distribution. For example, but not limited to, priorities such as community gardens, urban agriculture, and use of mobile markets in residentially zoned districts under certain circumstances such as farmers markets.

I presented this information in several pieces to the City of Asheville for guidance on how to proceed  and was presented with the following interpretation:

I have received the information I needed from the City Attorney’s office in regard to your recent inquiries concerning your property and whether it qualifies for the exemption from UDO zoning provisions as agricultural use property per Section 7.1.3 (C) of the City’s Unified Development Ordinance (UDO). We have determined that it does not.

While the City of Asheville has far more lenient statutes regarding agricultural production within the City than most cities in North Carolina, the particular exemption you request is not applicable. The City Attorney’s Office has reviewed the matter and concluded that the definition of agricultural use as it pertains to the aforementioned City UDO provision is based on the definition of agricultural land classification found in NCGS sec. 105-277.3(a)(1) concerning agricultural uses recognized as such for tax purposes by the State of North Carolina. This provision requires that in order to qualify as agricultural land, the property must consist of at least 10 acres that are in actual production and must also meet an income requirement of at least $1,000 for three years preceding the year for which the tax benefit is claimed. Since your property only consists of 2.5 [SIC] (property is only .25) acres, it therefore clearly does not qualify under the City’s definition of “agricultural use” and therefore, is not exempt from the provisions of the UDO. 

Since your property is not exempt, it is therefore subject to the RS-4 zoning provisions which, as previously explained, do not allow the building of an accessory structure (i.e. a barn, greenhouses) unless there is also a primary structure (i.e. a home or other permitted use) on the property. There is nothing, however, in the provisions that would prevent you from planting a garden or growing crops on a portion or even all of the property; or using a small portable building. (We have determined that one small enclosure to allow the storage of agricultural tools and equipment may be erected on a building lot that does not contain a primary structure in that the enclosure is not to be defined as a “structure” as defined in the UDO if it is no larger than 12×12 [the cutoff for requiring a building permit.]). The staff is looking into changing to this limitation to some extent, but we do not anticipate getting this possible change before regulatory bodies for two to three months.

While the promise of a regulatory change is promising, it’s not a guarantee… so rather than being allowed an exemption that I feel that I qualify for, I am being left to wonder whether the upcoming regulatory change might suit my needs.  This also says very little about the fee cost that I will incur if subjected to the full slate of ordinances.  And the big point for me is that I miss the growing season.

Now in terms of the use of § 105‑277.3. Agricultural, horticultural, and forestland – Classifications in the justification of the City’s position, the point is not well taken because this provision doesn’t actually provide a definition, simply a classification for a specific type of agricultural land (for property tax purposes). The actual definition comes from § 105‑277.2. Agricultural, horticultural, and forestland – Definitions which states “Agricultural land. – Land that is a part of a farm unit that is actively engaged in the commercial production or growing of crops, plants, or animals under a sound management program.” Admittedly this article does go on to describe “farm unit” as being required to be a specific size, but it does not explicitly limit the size of “agricultural land”. Moreover, the City’s exemption never discusses “agricultural land” only “agricultural uses”. The need to define “agricultural land” under these sections is for a program called the Present Use Value program which is intended to provide financial relief for farmers who own large chunks of land. The program effectively lowers the taxable value of the property to prevent farmers from being bankrupted by property taxes intended to be levied on a more revenue positive tax base. Furthermore, the present use value does not define all agricultural uses in the state of North Carolina (and one would think it would be more reasonable to review Chapter 106 – Agriculture rather than Chapter 105 – Taxes for a relevant interpretation of “agricultural uses”).

A key problem with the City’s interpretation is that the UDO exempts “bona fide agricultural uses recognized as such for tax purposes by the State of North Carolina.” According to the North Carolina Department of Revenue, “The property tax in North Carolina is a locally assessed tax, collected by the counties. The N.C. Department of Revenue does not send property tax bills or collect property taxes.” So while, property taxes on land are enabled by Chapter 105 – Taxes it’s semantic to reserve it as the only tax purpose through which one could exempt themselves given that it’s not a state tax. Sales tax on the other hand, which I’ve gained an exemption for related to my farm related purposes given the agricultural use of my property, is a state tax with an additional local fee levied.

While it seems that the City’s interpretation could present a path to compliance, it does not appear to me the only path. At this point, I’m given the option of appealing (which will cost $500) or the option of waiting for the ordinance to change. In either case I lose money, but the appeal will likely save me permitting charges that could interfere with the bottom line in the long run. Additionally, failing to achieve a bona fide farm declaration now, ultimately limits my future use of the property to any subsequent amendments to the UDO. In addition legal opinion favors the property owner in cases of ambiguity.