In time for the upcoming season, we wanted to spotlight a decision of the British Columbia Supreme Court dealing with property tax assessment of a Christmas tree farm. The case is cited as Kelt v. Assessor of Area #04 – Central Vancouver Island, 2015 BCSC 1475.
The decision in Kelt concerned property tax assessment (and, consequently, property taxation) of land being developed as a farm. In particular, the question was whether an owner of a developing (but not yet operational) farm had to meet a projected harvest date. Based on the decision in Kelt, the answer is "no". To maintain their farm status, owners of developing farms are not required to comply with their projected harvest date.
Local governments may see the effects of this decision in an increase in the number of properties classified as a farm and, consequently, paying lower property taxes.
The situation in Kelt was simple. Bruce and Dorothy Kelt wished to develop a Christmas tree farm on their property. In 1997, they applied to the Assessor for farm status classification. The application included a development plan which indicated projected revenue of $2,500/year after a projected harvest date of 2003. The Assessor classified the property as a farm for the 1998 assessment roll.
The operation struggled: the Christmas trees were dying and the revenues were not rising. The projected harvest date was modified a few times and, when the 2012 the harvest date still did not materialize, the Assessor notified the Kelts that their property will be assessed as residential. That would result in an increase in property taxes.
The Kelts complained to the Property Assessment Review Panel, which sided with the Assessor, and then appealed the decision of the Panel to the Property Assessment Appeal Board. The Board also sided with the Assessor, and the Kelts appealed to the British Columbia Supreme Court.
The legal issue came down to the interpretation of section 8 of the Classification of Land as a Farm Regulation 411/95. This section deals with assessment of land under development as a farm. Among other things, section 8(7) requires that: "the assessor has approved a development plan ... that ... includes location and details of the crop to be planted, area, date of planting, expected yield, selling price and date of harvest."
In the Board's view, this requirement meant that the owner must comply with the harvest date projected in the development plan. "[T]o conclude otherwise would allow a property owner to remain a developing farm in perpetuity by continually amending their projected harvest date and never meeting the gross annual value requirement." (see paragraph 13 of the decision)
The Court disagreed concluding that the Kelts complied with the Farm Regulation by submitting the development plan for approval and having the plan approved by the Assessor. The Farm Regulation did not require them to follow or meet the projected harvest date of the development plan. The Court ordered that the Board direct the Assessor to amend the assessment roll.
Unfortunately, the Court did not substantively address the Board's concern that the objective of the legislation would be thwarted if the projected harvest date could be continually revised. To that effect, the Court stated only that:
[55] Laws must be clear and intelligible to allow individuals to know their rights and obligations. The Board was nevertheless of the view that the objective of the legislation would be thwarted if the projected harvest date could be continually revised, and land under development as a farm could remain classified as such indefinitely. In my view, this observation by the Board cannot serve to confer jurisdiction on the Assessor to impose an additional requirement for farm classification unsupported by the language of the Act or the Farm Regulation.
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