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.
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,
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.
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.
Definitions - Business Retention Act
apparatus or equipment" means any machine, device, mechanism, instrument,
tool, tank or item of tangible personal property used or held for use in
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.
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.
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.
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.
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.
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.
This is loss of value due to internal or external deficiencies.
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.
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.
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