Two houses on acreages in Linn County do not qualify for ag. exemption to county zoning

by Gary Taylor

Lang, et al., v. Linn County Board of Adjustment
(Iowa Court of Appeals, April 25, 2012)

The agricultural exemption to county zoning in Iowa – Iowa Code 335.2 – reads in part:

Except to the extent required to implement section 335.27, no ordinance adopted under this chapter applies to land, farm houses, farm barns, farm outbuildings or other buildings or structures which are primarily adapted, by reason of nature and area, for use for agricultural purposes, while so used.

This case is a consolidation of two cases, both involving houses built in the late 1990s on separate parcels (one parcel of 6.52 acres, the other approximately 35 acres) that were originally part of a larger 49-acre parcel.  After addressing the standard the court uses to review decisions by boards of adjustment (“A board’s action must be upheld if supported by any competent and substantial evidence.”) the court got to the substantive facts of the case.

House 1 – The Lang House.  House 1 was occupied by the Langs, and sits on 6.52 acres.  The Langs argued their activities of living in the house and growing trees, berries, asparagus, grapes, apples, tomatoes, and farm fish, as well as participating in government farm programs, qualified as “agricultural purposes” under the statute for both the house and the land.  The court noted that the only proof the Langs offered of an agricultural purpose—defined in prior caselaw as “the art or science of cultivating the ground, harvesting of crops and rearing and management of livestock”—was their assertion through an agricultural exemption sheet on which they listed the following activities as “commercial production”:

1. Trees, 4 to 5 acres, 80% for commercial production
2. Raspberries, 0.1 acres, 10% for commercial production
3. Blackberries, 0.1 acres, 10% for commercial production
4. Asparagus, Apples, 1.0 acres, 75% for commercial production
5. Grapes, tomatoes, 0.2 acres, 15% for commercial production

The Langs did not offer any additional evidence to support “commercial production,” such as tax returns or other financial records.  They argued that the Linn County Zoning Board of Adjustment (ZBA) improperly applied a “minimum acreage test” for the land, and since the legislature removed the “primary means of livelihood test” from the statute in 1963 the only question the ZBA should be asking is whether the Langs were “engaged in agriculture.”  In response the court simply stated that it did not read the ZBA’s findings to apply a minimum acreage test. The court also

Recognizing that Iowa case law has not defined the term “farm house” for purposes of the exemption, the court cited with approval a 1997 Attorney General opinion stating that a “farm house” is one in which the occupants, “are engaged in agriculture on the land where the house [is] located.”

While we appreciate that the Langs have participated in land conservation and tree planting projects, as well as growing some fruits and vegetables, the Langs failed to demonstrate to the ZBA those activities were sufficient to prove they were using House 1 and the 6.52-acre parcel for agricultural purposes. Similarly, although the Langs’ property has some of the attributes that a small farm or small agricultural enterprise may have, the Langs simply did not demonstrate that they cultivated the ground, harvested crops, or reared and managed livestock to an extent warranting an agricultural exemption …. Without that showing, they could not substantiate that House 1 and the 6.52-acre parcel were “primarily adapted, by reason of nature and area, for use for agricultural purposes.  We recognize that small-scale agricultural production should not be discouraged. However, at some point a line has to be drawn to determine what qualifies under the statute as “agricultural use” and what is more akin to a rural acreage. The Board, after considering all of the evidence submitted by the Langs, drew that line and determined House 1 and the 6.52-acre parcel were not used for “agricultural purposes” under the statute.

House 2 – The Tenant House.  House 2 was originally intended for use by the Langs’ son, so he could assist with farm operations after completing college. When the Langs’ son did not occupy the house, the Langs decided they would rent it to other tenants.  The Tiernans (the original tenants) kept work logs of their activities related to the acreage.  The logs showed that over a 21-month period the tenants averaged at most 3.7 hours per day toward caring for the land, trees, and fish production, and 2.6 hours per day if tasks not clearly related to these activities were removed.  The court affirmed that under the statue, the key consideration is whether House 2 and the land are “primarily adapted, by reason of nature and area, for use for agricultural purposes.” The Langs argued that the ZBA applied the language in such a way that it amounted to the “primary means of livelihood” test, which the legislature removed in 1963. The court disagreed, noting that the ZBA considered, among other things, the amount of time devoted to the performance of the work duties and that the ZBA was looking at whether the tenants were “primarily engaged” in agriculture, not whether their primary livelihood was being made from agricultural activities on the land. Because the facts provided a basis for the ZBA’s decision, the court refused to overturn the decision.

Justice Tabor issued a dissenting opinion, disagreeing first with the majority’s characterization of the case as one that simply requires finding substantial evidence to support the ZBA’s decision.  She instead would look at the district court’s interpretation of the ag exemption, which the court of appeals is not required to give deference.  She viewed statements from the Linn County Zoning Administrator – that “the county has honored the exemption for years and now the property is reduced to a 6-acre tract with a pond and some berries” – as an implicit application of a minimum acreage test which the ZBA followed.  She noted that in a June 8, 2004 contempt ruling, Judge Newmeister found that Daryl Lang “carries on two agricultural purposes on the parcel he owns in Linn County. He grows trees and he has a fish farm,” and thus the focus of the ZBA’s analysis should have been “whether the Langs’ use of their property had changed since the county recognized the original forty-eight-acre tract as falling under the agricultural exemption.”  She went on to observe:

The majority decision gives a nod to smaller farms, recognizing that “small-scale agriculture should not be discouraged.” The decision goes on to say that some line drawing must be done between what qualifies as an “agricultural use” and “what is more akin to a rural acreage.” I agree that the size of the acreage is a relevant factor in determining whether the property is used for agricultural purposes, but I disagree that a board of adjustment can draw an arbitrary line that parcels of less than ten acres cannot be “primarily adapted” for agricultural purposes. Now that the conventional view of Iowa agriculture as the production of corn, soybeans, cattle, and hogs is being challenged by the emergence of Community Supported Agriculture involving smaller farms growing fruits, vegetables, and livestock, it is critical that county boards of adjustment do not employ a litmus test for the number of acres necessary to qualify for an agricultural exemption….Had the board applied the proper legal test, it is likely that the crops listed on the Langs’ agricultural exemption information sheet would have satisfied the statute’s requirement that the land be “primarily adapted” for agricultural purposes.

Ohio Supreme Court rules on agricultural exemption from township zoning

by Gary Taylor

NOTE:  The agricultural exemption to county zoning in Iowa is a constant source of consternation. Take heart, Iowa landowners and county officials; this recent case from Ohio should give you comfort that you are not alone in wrestling with the intent and interpretation of ag. exemption legislation.

Terry v. Sperry
(Ohio Supreme Court, July 12, 2011)

The Sperrys owns property in Milton Township, Ohio on which they live and operate a winery.  The property is zoned R-1, Residential.  Before starting the winery, the Sperrys contacted the township zoning official and inquired whether a winery could be located on the property.  They were told that the business was allowed as a home occupation under the terms of the ordinance, and that a written approval or permit need not be issued.  The Sperrys obtained the  state and federal permits necessary to operate a winery.  They started grape vines and harvested grapes, obtained grapes and grape juice from outside sources, and made and bottled wine on the premises.  Five percent of the sales of bottled wine sold on the premises were from grapes planted, cultivated and harvested on the property.  Shelf-stable foods were also sole on the premises.

In 2008, the township filed a complaint for temporary and permanent injunctions to stop the use of the property as a retail business and restaurant in an R-1 zone, based on neighbors’ complaints.  The parties eventually agreed that the issue for the court was whether the Sperrys’ operation qualified as an agricultural use exempt from zoning regulation by Ohio Revised Code 519.21(A).  The trial court and the Ohio Court of appeals both answered this question in the negative (siding with the township).  The Sperrys appealed to the Ohio Supreme Court.

After going through the litany of cases holding that zoning regulations should be strictly construed in favor of the landowner, the Supreme Court turned to the relevant Ohio code provisions.  The code R.C. 519.21(A) states that the township zoning enabling act “confer[s] no power on any township zoning commission, board of township trustees, or board of zoning appeals to prohibit the use of any land for agricultural purposes or the construction or use of buildings or structures incident to the use for agricultural purposes of the land on which such buildings or structures are located, including buildings or structures that are used primarily for vinting and selling wine and that are located on land any part of which is used for viticulture….”  R.C. 519.01 includes in the definition of agriculture “…the processing, drying, storage, and marketing of agricultural products when those activities are conducted in conjunction with, but are secondary to, such husbandry or production.”  The township argued first that the Sperrys’ activities do not meet the definition of agriculture because only five percent of the wine sold on the premises was made from grapes grown on the premises, making the sales and processing the primary use, and the grape growing the secondary use.  The Supreme Court agreed; however, it went on to state that while the winery itself does not constitute an agricultural use by the general definition of “agriculture,” the exemption in R.C. 519.21(A) contains no requirement that the vinting and selling of wine be a secondary or subordinate use of the property, or that viticulture be the primary use.  On the contrary,

If there is agricultural use of the property (viticulture), the township may not regulate the zoning of buildings that are used primarily for vinting and selling wine. The General Assembly included a specific example of what constitutes “the use of buildings or structures incident to the use for agricultural purposes of the land on which such buildings or structures are located” when it followed that phrase with “buildings or structures that are used primarily for vinting and selling wine and that are located on land any part of which is used for viticulture.” Therefore, under R.C. 519.21(A), a township may not prohibit the use of buildings for the vinting and selling of wine on a property as long as the property also cultivates grapes for wine making….Had the General Assembly intended that viticulture must be the primary use of the property to qualify under R.C. 519.21(A) for exemption from township zoning, it could have easily expressed that requirement.

The Court then referenced as an example R.C. 519.21(C) which requires that a farm market receiv 50 percent or more of its gross income from produce raised on farms owned or operated by the market operator before being exempt from township zoning.  Under the “clear and unambiguous” language of the code, therefore, the Sperrys’ operation was exempt from township zoning.  The Supreme Court reversed the judgment of the Court of Appeals

Manufacturer’s wastewater lagoon not entitled to agricultural exemption from Sioux County zoning

by Gary Taylor

Kramer et al. and Sioux Pharm, Inc. v. Sioux County, Iowa
(Iowa Court of Appeals, November 24, 2010)

Plaintiff Sioux Pharm, Inc. manufactures chondroitin sulfate through an extraction process using cow tracheas, pig and chicken parts, and corn. This process produces 15,000 to 18,000 gallons of industrial wastewater daily at Sioux Pharm’s manufacturing facility. The wastewater is described as a “filtered food-grade bovine protein solution.” The city of Sioux Center will not accept the wastewater into its municipal treatment facility, and so in 2003 Sioux Pharm began construction, without prior approval from Sioux County or the Iowa Department of Natural Resources (DNR), of an earthen wastewater storage lagoon located on farmland in rural Sioux County owned by plaintiff Carol J. Kramer, as trustee of her revocable trust.

In April 2004, the DNR approved the wastewater storage lagoon as built, and issued Sioux Pharm a permit, but stated that “any product going to the proposed lagoon is truly waste.” The lagoon is an uncovered earthen pit that holds a total of 859,000 gallons of “high-strength organic” wastewater.  Plaintiff Dr. Allan Kramer farms the land owned by the Carol J. Kramer trust, and he periodically purchases wastewater from Sioux Pharm and applies it to nine application sites at the rate the DNR authorizes.. The wastewater contains nutrients that have some benefit to crops. Although Sioux Pharm has a commercial fertilizer manufacturer/dealer license, it is not authorized to sell wastewater after it has been stored in the lagoon, as once the wastewater is placed into the lagoon it becomes contaminated with bacteria.

Under the Sioux County zoning ordinance, “treatment facilities in an Agricultural District require a Special Exception Use permit.” Although the DNR approved both Sioux Pharm’s construction (after the fact) and use of the lagoon, Sioux Pharm had not obtained a special exception use permit from Sioux County Board of Adjustment. Upon receipt of multiple complaints about the lagoon and the odor emitting from it, the Sioux County Zoning Administrator determined that the lagoon was being operated without a special use permit. In January and March 2008, the zoning administrator provided Sioux Pharm with written notices that its construction and use of the lagoon was in violation of the zoning ordinance. Sioux Pharm met with the Sioux County Planning and Zoning Commission at its April 2008 meeting and represented to the commission that the wastewater stored in the lagoon was a “filtered food-grade bovine protein solution.” After the meeting, Sioux Pharm applied for a permit for a “non-farm” use involving “industrial wastewater.” In August 2008, the Board granted Sioux Pharm a temporary special exception use permit “for construction of an earthen wastewater lagoon used for storage of industrial wastewater from the Sioux Pharm plant in Sioux Center, Iowa.” The temporary permit was subject to several conditions, and expired on June 1, 2009 at which time the application was to be reviewed for extension or expiration by the Board of Adjustment.

The Board held a meeting on May 27, 2009 and reviewed recommendations of the Planning and Zoning Commission with regard to the status of the temporary permit. The Board determined Sioux Pharm had failed to meet the conditions imposed by the temporary permit and declined to extend the permit. The temporary permit expired on June 1, 2009, but Sioux Pharm continued to transport wastewater to the lagoon daily, despite the expiration of the temporary permit. On June 1, 2009, Sioux Pharm filed suit in district court, premised upon establishing that the use of the wastewater storage lagoon was “primarily adapted for use for agricultural purposes” under the language of Iowa Code 335.2 and was therefore exempt from Sioux County zoning regulations.  The district court entered judgment in favor of the county, concluding substantial evidence supported the Board’s finding that Sioux Pharm’s storage lagoon did not meet the agricultural exemption.  The district court specifically stated:

“The storage lagoon was built by Sioux Pharm, Inc., not the landowner. Sioux Pharm, Inc. is a manufacturer who is not involved in agriculture. Even though Sioux Pharm, Inc. calls its wastewater ‘fertilizer,’ it has never registered the wastewater as a fertilizer or soil conditioner with the Iowa Department of Agriculture and has not complied with regulations for the storage of liquid fertilizer. It has obtained a fertilizer license but is not in the business of storing or selling fertilizers or soil conditioners. It is not in the business of raising crops or livestock. Sioux Pharm, Inc., is a pharmaceutical manufacturer.”

On appeal to the Iowa Court of Appeals, Sioux Pharm argued that Sioux County Board of Adjustment and the district court erroneously interpreted Iowa Code 335.2.  In making its case Sioux Pharm drew an analogy between its wastewater lagoon and the hog waste lagoon determined to be part of an agricultural operation in the 1993 Iowa Supreme Court case, DeCoster v. Franklin County.  In that case the Supreme Court determined that the storage and disposal of hog waste from a holding basin was a part of the agricultural function, reasoning that it would be incongruous to exempt hog confinement buildings from county regulation and at the same time subject the waste storage basin adjoining those buildings to county regulation.  The Court of Appeals, however, found the factual distinction between the DeCoster case and the present case “fatal to Sioux Pharm’s claim.”

“In DeCoster, the storage basin was constructed to store the waste that was the by-product of the livestock raised in hog confinement facilities located on the plaintiff’s farm. In this case, the lagoon was constructed to store the wastewater that is the by-product of Sioux Pharm’s industrial manufacturing facility located in Sioux Center…. Although the wastewater is eventually used to fertilize the land farmed by Dr. Kramer, the fact remains that the primary purpose and functional aspect of the lagoon is to store Sioux Pharm’s industrial wastewater.”

Accordingly, the Court of Appeals found that the Sioux Pharm waste lagoon was not exempt from the regulations of the Sioux County zoning ordinance.

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