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Real Property Appraisal Manual


The following is an updated version of the Agriculture Farm Building Costs. This section of the New Jersey Real Property Appraisal Manual has been revisited to include changes in construction techniques and building materials. In recent years pre-engineered post and frame structures in large have replaced the traditional masonry and frame structures due to their cost effectiveness in construction. This supplement of the Real Property Appraisal Manual for New Jersey Assessors provides the specifications and cost approach to value. Contained in this issue are cost conversion tables, depreciation, depth factors tables plus various illustrations and definitions to assist the assessor in classifying and calculating replacement costs.

Included in this publication are the original traditional building costs to accommodate existing structures throughout the state. The section is contained on the pages II-108 to II-114 and is comprised of class 150 through class 156, no changes have been made to this section. Structures of this type, in most cases, will require functional and economic obsolescence, and if warranted, physical deprecation.

To aid the Assessor in the valuation of dissimilar structures a demonstration appraisal on page II-115.12 is included for reference. It should be noted that while the base year of 1975 is still the starting point, a separate farm conversion factor (F-1) has been established for these buildings.

In the second part of this handbook, a new section has been added which includes replacement values using current construction material and methods. Post and frame style buildings are the "PF" series which encompass categories 157 through 163 found on pages II-115.1 to II- 115.7. Alternative cost tables and adjustment sections are based on local material and labor costs prevailing throughout New Jersey as of October 1998. To efficiently use this section, the assessor must be familiar with all the cost schedules herein and should be proficient with the appraisal procedures outlined in Volume I of the Handbook. Additionally, since this manual is in a format suitable for computerization, accuracy and uniformity in the use of all cost data is absolutely essential.

A new section covering Greenhouses and/or Seed Starting Houses is also included as a handbook revision on page II-115.8 and II-115.9. While historically these structures were addressed in the commercial portion of the Appraisal Manual, updated values are now provided for farm based buildings. Square foot costs are current as of October 1998 and the cost conversion factor of F-2 is to be employed when appraising these building.

In the appraisal of farm buildings, the assessor must be familiar with all the recent legal and statutory rules governing the taxation of farm structures. Of particular concern in this area are the "single use" structures, which are exempt from taxation. 54:4-23.12 defines a single use agricultural or horticultural facility which is exempt from taxation. All other structures, whether used for agricultural or horticultural purposes, residential use or otherwise, must be valued, and taxed by the same standards applicable to all other taxable structures in the taxing district.

The Business Retention Act

P.L. 1992, c24, "The Business Retention Act", amends the description of local taxable property to reaffirm the Legislature's regularly stated position of excluding machinery, apparatus and equipment used or held for use in business from local taxation.

The law amends subsection b. of R.S.54:4-1 to specify that items of machinery, apparatus or equipment used in the conduct of a business are defined as personal property regardless of the class or type of real property to which such items may be affixed. Such items are defined as locally taxable real property only if they constitute a structure, as defined in the law, or are primarily used to enable a structure to support, shelter, contain, enclose or house persons or property. Examples of machinery, apparatus or equipment which enable a structure to house persons or property, and which are therefore locally taxable, include central heating or air conditioning systems, elevators, suspended ceilings, affixed partitions, plumbing and plumbing fixtures connected to a plumbing system, overhead lighting, sprinkler systems, piping and electric wiring up to the point of connection with a manufacturing process within the structure, and a central hot water system or the boiler primarily used to supply it.

54:4-1.15. Definitions - Business Retention Act

"Machinery, apparatus or equipment" means any machine, device, mechanism, instrument, tool, tank or item of tangible personal property used or held for use in business.

"Production process" means the process commencing with the introduction of raw materials or components into a systematic series of manufacturing, assembling, refining or processing operations and ceasing when the product is in the form in which it will be sold to the ultimate consumer.

"Structure" means any assemblage of building or construction materials fixed in place for the primary purpose of supporting, sheltering, containing, enclosing or housing persons or property.

"Used or held for use in business" means any item of machinery, apparatus or equipment used or held for use in a business transaction, activity, or occupation conducted for profit in New Jersey.

54:4-23.12. Valuation, assessment and taxation of structures

  • All structures, which are located on land in agricultural or horticultural use and the farmhouse and the land on which the farmhouse is located, together with the additional land used in connection therewith, shall be valued, assessed and taxed by the same standards, methods and procedures as other taxable structures and other land in the taxing district, regardless of the fact that the land is being valued, assessed and taxed pursuant to P.L.1964, c. 48 (C. 54:4-23.1 et seq.); provided, however, that the term "structures" shall not include "single-use agricultural or horticultural facilities." As used in this act, "single-use agricultural or horticultural facility" means property employed in farming operations and commonly used for either storage or growing, which is designed or constructed so as to be readily dismantled and is of a type which can be marketed or sold separately from the farmland and buildings and shall include, but not be limited to, temporary de-mountable plastic covered framework made up of portable parts with no permanent under-structures or related apparatus, commonly known as seed starting plastic greenhouses, or other readily dismantled silos, greenhouses, grain bins, manure handling equipment, and impoundment's, but shall not include a structure that encloses a space within its walls used for housing, shelter, or working, office or sales space, whether or not removable.

  • The Director of the Division of Taxation shall adopt, in consultation with the Secretary of Agriculture and in accordance with the "Administrative Procedure Act," P.L.1968, c. 410 (C. 52:14B-1 et seq.), rules and regulations establishing criteria for the assessment of all farm structures.

  • In the valuation and assessment of farm structures the assessor shall consider those indications of value which such structures have under the same value applicable to all other real property. Assessors shall take into consideration the following criteria for the establishment of value:

  • Cost less depreciation: Based on the premise that the cost new of the structure is the highest possible value. Costs may include in addition to materials and labor, architect, engineering and permit fees, surveys and site improvement costs. From the highest possible value are deducted accrued depreciation, physical deterioration and functional and economic obsolescence.

  • Alteration to existing structures: The cost of alterations or modernization to an existing farm structure does not necessarily add to building value. Where major alterations or modernization definitely increases or adds to the value of the farm structure, the percentage appreciation is determined by estimating the probable increase in sales value or the increase in remaining economic life of the building.

  • Specialized nature of building use: Farm structures are designed and built for specific production uses. Knowledge of building types, construction quality, useful life and utilization is important in determining value. Comparisons should be made with like structures.

  • Depreciation: The physical condition of agricultural buildings should be compared to the near perfect condition of similar new buildings, based on inspection of all components. A depreciation schedule for farm structures shall be used in the assessment of the physical condition of a building.

  • Obsolescence: This is loss of value due to internal or external deficiencies.

    • Functional obsolescence is loss in value due to the inability of the structure to perform adequately the function it was intended for. Functional obsolescence would result if a building has limited contribution to a farming operation by being technologically obsolete, such as a dairy barn with 30 stall stanchions when today's standard is larger free stall structures with milking parlors. Or being unusable for the purpose for which it was built.

    • Economic obsolescence of a structure with a specialized agriculture use is loss in value as a result of impairment in utility and desirability caused by factors outside the properties boundaries. For example dairy farming has generally been unprofitable for New Jersey Farmers, therefore farm structures design for milk production have limited value even though said structures are physically usable.

    • Municipal zoning: Ordinances or codes may limit the use of a farm structure to agricultural purposes. Consideration should be given to the permitted uses of a structure. The proximity of a farm structure to a farm dwelling shall also be considered since the valuation of both buildings may be adversely impacted
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