In NJ, tiny farms ‘gaming the system’ can earn big tax breaks for wealthy estates

A six-decade-old tax break intended to help struggling farmers in the Garden State has long been a target of critics who say it’s been co-opted by wealthy suburban landowners. Now, there’s a push to tighten its loopholes.

New Jersey lawmakers approved the Farmland Assessment Act of 1964 to help farms that were being squeezed out of business as demand for suburban housing drove up land values — and the taxes that went with them.

Today, about 35,000 landowners enroll some part of their properties in the program, which can discount a real estate tax bill by up to 98%.

Complaints about alleged abuses have been around almost as long as the program itself. In her 1993 race for governor, Christie Whitman faced criticism for farm assessments on two family properties in Central Jersey, though she won the election anyway. More recently, NJ Transit CEO Kevin Corbett took flak in 2019 for claiming a tax break based on a flock of sheep kept at his Mendham Township home.

The state revised the law in 2013, requiring more farming revenue to qualify and more training for local tax assessors.

But critics say the changes haven’t gone nearly far enough, and a review this summer by The Record and Northersey.com of just who receives farmland assessments reveals that the breaks are still used by many wealthy landowners living on luxury suburban estates that seem to have little to do with commercial agriculture.

“The size of that program is a red flag,” said state Sen. Joe Pennacchio, a Morris County Republican who is pushing for a commission to reevaluate the program.

“I’m not against it,” he said. “But what I don’t want is people gaming the system, forcing other people to pay more tax, which is what is driving people out of this state.”

Getting a farmland tax assessment in NJ is easy

Obtaining a farmland assessment is simple in New Jersey — if you own enough land. Property owners must fill out an annual form attesting they have set aside 5 acres or more for agricultural purposes and that they expect to make at least $1,000 from that activity. (Taxes are reduced only on the agricultural portion of a parcel; homes and other non-farming uses are taxed at the normal rate in town.)

Agricultural activity can range from growing crops to raising chickens, sheep or goats, as well as horse farming and beekeeping. With New Jersey seeking to preserve open space, the program is also open to acres that qualify as pasture, wetlands or woodlands.When the act passed in 1964, the state required that farmers produce at least $500 a year in revenue to qualify, whether through sales of produce, firewood or other products or the value of livestock kept on site. That minimum would equate to about $5,000 in today’s dollars, but when legislators raised the threshold in 2013, it was only increased to $1,000.

The revisions also allowed owners to claim the break for new kinds of farms: biomass, solar or wind energy generation now qualify.

The yearly applications are processed by municipal tax assessors who may or may not seek supporting documentation. In interviews, some assessors said receipts are rarely required. In most cases, the applicant merely attests to the anticipated income.

Pennacchio proposed his commission after meeting with Mendham Township resident Jack Curtis, who has spent years compiling data on farmland assessments awarded in and around his Morris County town, where the median home value in 2022 was $1.05 million, according to the U.S. Census.

In Mendham Township ‘this law has morphed into a scam’

Curtis, a former high school principal in Roxbury, seethes over the imbalances in town. While he pays more than $9,600 in annual property taxes on the undeveloped portion of his 2½-acre lot, some of his neighbors pay only a few hundred dollars on significant portions of their multi-acre estates thanks to farm assessments.

“This law has morphed into a scam that wealthy people, with large tracts of land, have adopted as their own personal tax-reduction scheme,” Curtis said.

Through Open Public Records Act requests, Curtis confirmed 155 farmland-assessed properties in 2024 for Mendham Township, which has a population of 6,000. Combined, those properties included 1,600 qualified acres, on which owners paid $11,000 in property tax. Curtis estimates they would have owed an additional $1.1 million if not for the farmland designations.

“No one is doing me a favor while I pay $4,683.32 per acre in tax, while these 155 entitled folks are paying $6.88 per acre,” he said.

“What they are actually doing is transferring their tax bill to the 2,126 non-assessed property owners in town,” Curtis added, citing data from 2021. “It has to be understood: This is a tax transfer, not a tax break.”

Morris County is a Ground Zero for what Curtis sees as abuse of the farmland assessment privilege. The county currently has about about 1,500 qualified properties that claim to be farming in 28 of its 39 towns.

Mayor defends the farmland assessment program

Mendham Township Mayor Sarah Neibart defended the residents receiving those tax breaks. Farming has been a major activity in the township since its settlement in the early 18th century, she said. 

“Mendham Township is a residential community with a traditional character based upon its rural and historic past and high-quality natural resources, especially our extensive woodlands and pristine streams,” Neibart said.

That history includes 20 agricultural parcels identified in Mendham Township in 1964 when the farmland assessment law was passed. Sixty years later, the 155 designated properties in town represent a 775% increase.

The mayor is also a beneficiary of the program. She lives on a 65-acre estate complex owned by a limited liability company affiliated with her father-in-law, Sol Barer, the former CEO and current board chairman of the pharmaceutical company Celgene Corp. The land is enrolled in the farmland program.

Mendham Township residents are hardly alone in the practice. Other towns in and around the affluent Somerset Hills region have even more farm-assessed parcels, including Harding, with 177 qualified properties; Chester Township, with 166; and Washington Township, with 304.

Trump National Golf Club houses goats, saves an estimated $257K in taxes

Crossing south into Somerset County, farm-assessed tracts have benefited are owned by Whitman, the former governor; Johnson & Johnson heir and New York Jets owner Woody Johnson; and family members of the Forbes publishing empire.

In Bedminster, former President Donald Trump enjoys a farm tax break for a portion of his Trump National Golf Club.

Trump National’s 2024 FA-1 farm assessment application, obtained from the Bedminster tax assessor, lists 320 acres taxed as standard commercial property, including its golf courses. It also includes 183 acres that are treated as farmland: 113 acres on which the club says it grows hay and another 70 counted as protected woodlands or wetlands, according to the form.

Trump National — referred to on the application as the Lamington Farm Club LLC — also claims a herd of 12 goats as part of its agricultural operations.

The club’s 2024 property tax bill comes to $450,000 for its 320 conventionally taxed acres — a rate of $1,406 per acre — and $1,168 for its farmland, or just $6.38 an acre.

That’s a saving of almost $257,000, Curtis calculates. “Donald Trump charges a $350,000 membership fee to anyone who wants to join his club,” he said. “I hardly believe that Mr. Trump needs a 98% tax reduction when one new membership would more than pay for the taxes he is avoiding.”

The club didn’t return messages seeking comment.

Staffing reduces compliance to an honor system

The state allows for civil penalties of up to $5,000 for “gross, intentional misrepresentation” on applications. But oversight can be minimal, and periodic inspections required by statute are not always done.

Mendham Township Tax Assessor Scott Holzhauer agreed more reviews are needed to weed out what he acknowledges can be “boutique” and “hobby” farms.

Holzhauer handles assessor duties in eight municipalities, which include 420 farm-assessed properties. He said the original 1964 threshold of $500 per farm would translate to $5,067 in today’s dollars. He’s still wondering why the Legislature raised it to only $1,000 when it made changes a decade ago.

“If you’re a farm and you’re struggling to make that $5,000, I got news for you: you’re not a farm,” he said. “$1,000 is a joke.”

Site inspections should be done regularly, he said, but time and staff restraints generally limit him to visiting only new applicants and those who request building permits on designated farmland.

Curtis pointed to another Mendham Township case, a 20-acre estate that includes a historic mansion on 2 of the acres. On a portion of the remaining 18 acres sit two beehives he said are maintained by an outside beekeeper.

The harvested honey is sold at tables that sit alone outside the estate, with a jar for honor-system payments. “All they have to do is attest they sold $1,000 worth of honey” a year, Curtis said. “It’s ridiculous.”

A farmer-mayor in Harding pushes back

Supporters of the farmland program say it’s not that simple. Some property owners may not be farmers, but they qualify by renting or leasing some of their land to legitimate operations that use their properties.

Harding Mayor Timothy Jones, for example, leases land from several neighbors to operate his family’s equestrian farm. The arrangement isn’t predicated on scoring those other owners a tax break, he said, but on giving his business a fighting chance.

With property values high in the area, many New Jersey farmers usually can’t afford to own the acreage needed to turn a profit, Jones said. Instead, he rents additional pasture from neighbors to run, breed and train his animals. He also hosts a summer riding camp for children.

With a population of about 3,900 and a median household income of $150,000 in the latest U.S. census, Harding is largely known to outsiders as a wealthy bedroom community with fancy homes on large lots. Some 170 properties also enjoy the farmland assessment break, state figures show.

“We have a long history in Harding of preserving open space not only for conservation and recreation but also for farming,” Jones said. “My wife and I, along with her sister and family, own and operate a horse farm here. Four of the five members of the Township Committee own farmland in Harding and elsewhere in New Jersey.”

‘It’s hard enough to farm in New Jersey’

That sort of land-leasing is not unusual in the region, even in some of the high-ticket communities in southern Morris County, Jones said.

Some people may be taking advantage of the farmland assessment program, the mayor acknowledged: “There’s no doubt whenever the government has a program, there’s going to be some amount of abuse.”

But, he added, “It’s hard enough to farm in New Jersey. The bureaucrats don’t make it easy. So the notion that we’re going to add another layer of regulation is a headache for someone like me.”

Frank Pinto, a former Morris County planner, works as a consultant to property owners and farmers looking to structure land-use arrangements to benefit both sides.

“I’m not saying [the program] is not without its challenges, but there needs to be a basic understanding of agricultural and farming practices in a suburban-urban state like New Jersey,” said Pinto, who operates NJlandowner.com.

“For my clients, I tell them if they have a farm of marginal size or income level that they should be very well prepared to prove they are producing ag products,” he said. “I coach them on that to make sure they are not getting away with something they should not be getting away with.”

How to fix the system

Current standards offer effective firewalls to discourage offenders, Pinto argued. The state in recent years has stepped up oversight of municipal tax assessors who process farmland assessments, he said, including a requirement for more training of local officials.

Jones said his own tax assessor in Harding Township has been vigilant and once denied him an annual permit until he corrected his financial reporting procedures.

“That year, he failed 42 applicants,” Jones recalled. “I redid my books and we worked it out.”

The revisions passed by the state a decade ago, including doubling the revenue threshold, led many owners to exit the farmland assessment program, Pinto said. Applicants claiming their land as pasture for a horse owned for personal use, for example, could no longer qualify because the formula required by the state made it hard to reach the $1,000 benchmark.

Some think the limit should be even higher.

A $5,000 threshold “would pick off a lot of the smaller farms” that really are not farms, said Holzhauer, the Mendham Township assessor.”When you look at a house on 10 acres, the principal use is the house,” he said. “Anything else, quite frankly, is a hobby. I’m a mountain biker, but I don’t get a tax break for that. Why should others get a tax break for their hobby when I don’t get one for mine?”

Pinto also suggests lengthening the “rollback” tax imposed on owners who can’t produce enough agricultural revenue. The penalty is currently imposed on the last three tax years; extending that to 10 would be even more of a deterrent, he said.

Is reform on the way?

Last spring, Curtis took his crusade to the airwaves, reaching Gov. Phil Murphy on a radio call-in show and earning an invitation to the Statehouse. Armed with reams of research, he traveled to Trenton in April for a private meeting with Murphy.

“He listened and was very receptive,” Curtis said. “Could not have been nicer.”

There’s been no follow-up from Murphy’s administration since, Curtis said. The governor’s office did not respond to messages from NorthJersey.com seeking comment.

Confronted with the same data, Pennacchio introduced a bill in the Senate in June that would establish a Farmland Assessment Review Commission. It would annually evaluate and recommend changes to the farmland program “to ensure fair and equitable allocation of benefits.”

“Although I support the mission of this program, there are currently more than 35,000 farmland-assessed properties in New Jersey, and there is no explanation for why the number is that high,” Pennacchio said. “By creating this review commission, we can increase transparency for taxpayers and make sure that the rules and regulations of the program are enforced properly.”

The bill has picked up one co-sponsor: state Sen. Anthony Bucco, who represents much of Morris County and also leads the Republican minority in the state Senate. He cautioned that there may not be a quick fix to the issue.

The tax break “definitely needs to be looked at,” Bucco said. “But this is just a first step. It’s very difficult to determine who is and who isn’t actually farming.”

Crucially, the legislation, S3446, has yet to pick up any co-sponsors among Democrats, who control both houses of the Legislature and the governor’s office. State Senate President Nicholas Scutari and Assembly Speaker Craig Coughlin, the Democratic leaders in their respective chambers, were asked by The Record and NorthJersey.com for a comment. Scutari did not respond. Coughlin declined to comment through a spokesperson.

Holzhauer said reform could make his life a little easier.

“For assessors in towns with farm properties, farmland assessments are the single worst aspect of our job,” he said. “Worse than tax appeals [or] anything, in that so much effort has to go into it for so little return for the township.”

To qualify for a farmland assessment:

• A property owner must own at least 5 contiguous acres devoted to agricultural/horticultural use.
• The land must be devoted to agricultural/horticultural uses for at least two consecutive years before the tax year.
• The land must continue in agricultural/horticultural use to the end of the tax year for which the application is made.
• Gross sales of crops or livestock must total at least $1,000 per year for the first 5 acres, plus $5 per acre for each additional acre.
• Gross sales of woodland/wetland under a Woodland Management Plan must total at least $500 per year for the first 5 acres, plus 50 cents per acre for any additional acres.
• For farm management units less than 7 acres, a descriptive narrative of agricultural/horticultural uses, a sketch of their location and the number of acres actively devoted is required.