Monday, March 22, 2021

The Agricultural Exemption: Jefferson County v Wilmoth (Tenn. App. 2021)

Jefferson County v Wilmoth Family Properties, Tennessee Court of Appeals, February 1, 2021

One of the most difficult questions arising in Tennessee land use cases is the enforceability of zoning regulations against agricultural activities within county government jurisdiction (the statutory exemptions for the most part do not apply to municipal governments). The Wilmoth case offers some clarification although the waters remain murky.

Let’s start by mentioning the statutory provisions which cause the difficulty in the first place. When the Tennessee Zoning Enabling Statutes were passed in 1935, the County legislation included a very significant agricultural exemption:

This part shall not be construed as authorizing the requirement of building permits nor providing for any regulation of the erection, construction, or reconstruction of any building or other structure on lands now devoted to agricultural uses or which may hereafter be used for agricultural purposes, except on agricultural lands adjacent or in proximity to state federal-aid highways, public airports or public parks; provided, that such building or structure is incidental to the agricultural enterprise. Nor shall this chapter be construed as limiting or affecting in any way or controlling the agricultural uses of land.

Tenn. Code. Ann. § 13-7-114 (a). In addition, years later, the General Assembly added another provision, which only serves to increase the confusion:

Nothing in this part shall be construed as granting counties the power to prohibit or regulate normal agricultural activities.

Tenn. Code. Ann. § 5-1-118(b). It is anybody’s guess why the second provision only relates to “normal agricultural activities” when the first essentially prohibits any control over presumably all “agricultural uses of land.” The distinction between the two statutes is not the subject of our story, but just an interesting sidelight. It should be mentioned here that the original statute was not mentioned in the Wilmoth opinion; presumably the attorneys may not have cited it to the court.

The Tennessee Supreme Court took a look at this area not too long ago in Shore v Maple Lane Farms, 411 S.W. 3d 405 (Tenn. 2013). While I would characterize the opinion as fairly liberal concerning the interpretation of the agricultural exemption, the court drew a line at entertainment activities and decided that such things as concerts and other entertainment simply were not part of agriculture.

Tennessee being the farming state that it is the General Assembly immediately went to work and defined the term agriculture in a way so as to include entertainment activities. Tenn. Code. Ann. § §1-3-105 and 43-1-113. Both of these sections are definitional and include the same language relating to agricultural activities.

The question in Wilmoth was whether this farm of approximately 30 acres in size where cattle has been sold for profit but at the time of the case, only nine cows and a bull or on the farm; farm also had 18 to 22 chickens which produced 400 to 600 eggs per month. But the main income producing aspect was an event venue, where various types of parties and wedding receptions were held. As you might guess, income from the farm related to what might be referred to as normal agricultural activities was only $6250 in 2019 whereas rental income for the venue events was approximate $40,000 more. Mr. Wilmoth, the farmer, testified in-depth concerning his time operating a farm and he indicated that he spent minimal time facilitating the event venue business; that most of his time was related to working on the farm. The County of course argued that Wilmoth was attempting to circumvent the zoning regulations by maintaining a token amount of agricultural activities which had no connection to the much more lucrative commercial event venue use. The County argued that the current use the property was not agricultural and thus it was not protected by either statutory provision.

The broadened statutory definition of agriculture passed by the General Assembly after the Supreme Court decision in Shore, reads as follows:

“Agriculture” means:

(i) The land, buildings and machinery used in the commercial production of farm products and nursery stock;

(ii) The activity carried on in connection with the commercial production of farm products and nursery stock;

(iii) Recreational and educational activities on land used for the commercial production of farm products and nursery stock;  and

(iv) Entertainment activities conducted in conjunction with, but secondary to, commercial production of farm products and nursery stock, when such activities occur on land used for the commercial production of farm products and nursery stock;

Tenn. Code. Ann. § 1-3-105.

Neither the trial court nor the Court of Appeals felt that the weddings and other parties held at the event venue could be characterized as recreational or educational; however, to the extent that those activities were entertainment, conducted in conjunction with, but secondary to, the production of farm products, then the event venue would be protected by the agricultural exemptions.

As typically happens in these cases, Mr. Wilmoth, the farmer, testified that the property was offered as an event venue and that it was successful due to the aesthetic appearance of the farm and the farming operation itself, noting that the venue provided multiple photographic opportunities of general farm life.

The Court of Appeals concluded, like the trial court, “that the present use of the property is in keeping with the legislature’s obvious intent to allow the necessary supplementation of forming income with income from related activities as long as such activities are stopped secondary to the commercial production of farm products and nursery stock.” Accordingly, the trial court’s dismissal of the complaint was affirmed.

I’m confident that there will be more cases as time goes along. This certainly can be a difficult area of land use law. Many times the properties contested are fairly small, leading many people more familiar with larger farming operations to doubt the nature of the land use. In addition, as in the Wilmoth case, often, the farmer makes more money from the event venue than from his farming activities. Frankly, this is to be expected. First of all, farming is hard work, and it does not pay particularly well unless you are farming on a very large scale. There is skepticism built into the analysis by local zoning officials.

Second, it’s not terribly clear what the General Assembly intended to protect with the latest definitional changes. It’s also not exceptionally clear how the definitions are to be applied. Wilmoth certainly is a start, but more cases will be needed to fill in the blank spaces.

Before concluding, it is interesting to take a look at the US Census of Agriculture, the latest version of which was published in 2017. There are specific versions for each state as well as the entirety of the country, and a brief look at the Tennessee census is very interesting.

First, over the last 20 years, the number of farms in Tennessee has dropped from approximately 90,000 farms to approximately 70,000 farms. That may give a good indication as to why the Tennessee General Assembly is protective of agricultural activities. Further, the size of the farms is also instructive. In 2017, with approximately 70000 operating farms, almost 6000 of those farms were under 10 acres in size. Almost ½ of all the farms in Tennessee were under 50 acres in size (30,000 farms). Another 25,000 farms were under 180 acres in size. As you can immediately see, many of the farms in our state are not very large.

The next item that jumps out is the fact that almost 31,000 farms in Tennessee make less than $2500 a year. Another 27,000 farms make less than $25,000 a year. So, of the 70,000 farms in Tennessee, approximately 58,000 of them make very little money, and probably not enough to live on. Once again, these numbers may explain quite a bit. If the state of Tennessee wants to keep some semblance of farming alive, special protections for farmers and farming activities seem undoubtedly necessary.

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