Committee hears dispute over taxing of off‑farm agricultural storage

Senate Bill 2,039, which would clarify when storage for agricultural products is treated as agricultural property for property‑tax purposes, drew a mix of farm, county and municipal testimony during a House Finance and Taxation Committee hearing.

The bill’s sponsor, Representative Ben Koppelman, introduced the measure as an attempt to make treatment of agricultural product storage—“grain, potatoes, sugar beets” and similar commodities—consistent across counties. “If the legislature intends to tax agricultural product storage, then we should do it everywhere. But if we intend not to tax agricultural product storage, then we shouldn't do it anywhere,” Koppelman said.

Supporters, including farmers’ groups and producers, told the committee that inconsistent local interpretation has led to disparate treatment. Senator Yana Meridahl (District 19), speaking in support, said staff who have worked the interim “dug into this a lot” and offered expert testimony online. Taryn Riley, an attorney who has represented farmers in related disputes, told the committee that the change is intended to clarify existing exemptions in the North Dakota Century Code and to limit unequal enforcement across counties. “This is asking to enforce equally the exemption the exemptions that are already existing,” Riley said, citing NDCC provisions that define who qualifies as a farmer and when structures can qualify for the farm‑structure exemption.

Pete Hanover of the North Dakota Farm Bureau urged passage as an “accuracy bill” to correct misclassifications that have occurred statewide. Representatives of corn, soybean and farm organizations also testified in support, saying the bill would promote uniform classification for agricultural storage across the state.

Municipal and county officials spoke in opposition. Bill Woken of the North Dakota League of Cities said the bill could exempt large amounts of taxable valuation for some cities, citing a local survey where agricultural production storage in Grafton totalled roughly $1.5 million in assessed valuation. “For some cities, this new exemption could have an effect of removing large amounts of taxable valuation from city rolls,” Woken said, and he requested the committee not pass the bill unless it limits exemptions for storage that occurs within municipalities.

Danelle Presky of the North Dakota Association of Counties told the committee that exemptions shift tax burden to other property owners and that the state should compensate political subdivisions when the legislature creates or expands exemptions. “All exemptions do is shift who's paying that tax burden,” Presky said.

Committee members pressed technical questions to Charles Dendy, general counsel for the Tax Department, about how the bill would change classification and whether it would force municipalities to reclassify property. Dendy said the bill’s language, as written, would change the classification of land to agricultural when the property is used for storage of crops and that the effect on the building’s exempt status would be less certain because the statute contains carve‑outs for certain commercial uses (citing NDCC section language discussed in testimony).

The committee did not take a vote on the bill during the recorded hearing. Testimony and questions centered on: whether the bill is intended only to address on‑farm storage or to include off‑farm, city‑edge facilities; how assessors would determine primary use; how long crops may be stored and whether that would allow effective reclassification of formerly commercial buildings; and the fiscal effect on cities and school districts if valuation is removed.

The bill’s proponents said the goal is equalization and clearer statutory guidance, not a new exemption. Opponents urged limits or clarifying language to exclude storage located inside platted city limits or to define “first endpoint user” more precisely so assessors and local officials can apply the statute consistently.

A decision point flagged by multiple witnesses was the statute’s interplay with state case law and attorney general opinions: witnesses referenced a 2002 AG opinion dealing with whether a structure qualifies only if it is located on agricultural lands and described prior court decisions that have prompted statutory amendments. Committee members and witnesses suggested technical refinements and additional drafting to resolve ambiguity about location, duration of storage, and the test for “primary use.”

If the committee advances the bill, members indicated they may request amendments clarifying (a) the geographic limit of the exemption, (b) the definition of “first endpoint user,” and (c) whether the primary‑use test applies before or after any local zoning or platting change.

Ending: The committee moved next to unrelated bills; no formal action on Senate Bill 2,039 was recorded in the hearing transcript.