High Tunnel Legal and Taxation Issues

Governor Tom Corbett recently signed two pieces of legislation regarding the taxation of high tunnels in Pennsylvania. While this simplified the property tax issue, there remains substantial confusion among growers as to what is required in order to legally construct high tunnels in their local municipality. In addition, what constitutes a high tunnel, greenhouse, and sales facility as they relate to other agricultural production facilities varies from township to township and borough to borough.
This article seeks to answer some of the questions that growers have and provide some guidance in the building permit process. To that end, a series of questions were submitted to Pennsylvania Secretary of Agriculture George Greig.

1.) Explain the two pieces of high tunnel property tax legislation that Governor Corbett signed recently and how they impact growers.

Two bills amended two separate laws authorizing local property taxation. HB 1439 amended the Consolidated County Assessment Law which applies to counties of the second class and smaller. It was signed by the Governor on December 18, 2013 as Act No. 114 to take effect in 60 days.

The second bill was SB 638, which amended the General County Assessment Law which applies to counties of the first class, i.e. Pittsburgh and Philadelphia. It was signed into law on December 23 as Act No. 130 and also took effect in 60 days.

Both exempt from local property taxation the following defined structures:

“High tunnel.” A structure which meets the following:

1.   Is used for the production, processing, keeping, storing, sale or shelter of an agricultural commodity as defined in section 2 of the act of December 19, 1974 (P.L.973, No.319), known as the Pennsylvania Farmland and Forest Land Assessment Act of 1974 (Clean and Green), or for the storage of agricultural equipment or supplies.

2.   Is constructed consistent with all of the following:
  1. Has a metal, wood or plastic frame.
  2. When covered, has a plastic, woven textile or other flexible covering.
  3. Has a floor made of soil, crushed stone, matting, pavers or a floating concrete slab.

Growers realize the benefit of high tunnel houses in expanding the growing season at a relatively low cost. Taxation of these structures as real estate made this practice cost prohibitive and a disincentive for new structures. Acts 114 and 130 assure the high tunnels will not subject growers to burdensome property tax increases.

2) This property tax legislation seems to be a step forward in the status of high tunnels and their taxation; what farm group or groups advocated for this change?

Pennsylvania Farm Bureau, Pennsylvania Landscape and Nurserymen’s Association, Pennsylvania Association for Sustainable Agriculture (PASA), and Pennsylvania Vegetable Association were instrumental in passage of this legislation.

3) How does the specific language used in the property tax legislation noted in #1 & 2 help to define high tunnels as they relate to other agricultural facilities?

The definition in the laws clearly distinguishes high tunnels from other permanent structures and enables the exemption. For example, floors are required to be made of soil, crushed stone, matting, pavers or floating concrete—none of which are deemed to be permanent improvements. The structures are considered equipment rather than taxable real estate. By design, the structures may be moved elsewhere on the farm at any time.

4) High tunnels are somewhat different from other more permanent farm structures. When growers are communicating with their local municipality, how can the seasonal nature, and ag production status versus a sales facility such as a farm market greenhouse best be described?

Seasonal direct marketing of agricultural commodities may occur from the high tunnel; however the structures are unlikely to operate throughout the year as a farm market greenhouse. The County Assessment laws include “sales” as an eligible use for exemption but this does not pre-empt local Uniform Construction Code standards that may apply. Landowners may opt to move the facilities as needed or to not engage in direct marketing from the facilities in order to demonstrate the temporary nature of the structures.

5) Many municipalities are requiring not only a building permit, but also a storm water management plan, and land development plan. Are there resources such as standardized templates and engineering firms that are familiar with these structures for growers use as an aid in the development of such plans?

County conservation districts and local USDA Natural Resources Conservation Service (NRCS) provide technical assistance related to storm water management plans. Storm water management is regulated at the local level under the authority of the Municipalities Planning Code (MPC). Private engineering firms will assist in design and planning. Land Development Plans are also authorized under the MPC for any physical improvements to the land, including excavation. Interpretation of this requirement varies by township and may be specific to each individual project. Requests for exemption should be directed to municipal officials.

6) What is the role of the Pennsylvania Department of Agriculture in regulating high tunnels and the production therein?

The PDA strongly supports this new legislation and is available for outreach and education.

7) What legislation is pending that could help in leveling the ground around Pennsylvania as relates to the many differing rules between municipalities?

Please inquire with the Pennsylvania Landscape and Nurserymen’s Association for current bills or contact local officials. You may also search current legislation by visiting the PA General Assembly website.

8) How can growers participate in the development of regulations that related to high tunnels?

The recent amendment will not have a written regulation, however you may become involved in future legislation and policy by working through the Pennsylvania Landscape and Nurserymen’s Association and Pennsylvania Farm Bureau, or by contacting your local lawmakers.