Decision and Order CONCERNING: ROBERT A JOHNSON PETER RUDY SONJA RUDY ASSESSOR OF AREA #19 - KELOWNA

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1 Page 1 Decision and Order IN THE MATTER OF AN APPEAL PURSUANT TO S. 50 OF THE ASSESSMENT ACT CONCERNING: ROBERT A JOHNSON PETER RUDY SONJA RUDY ASSESSOR OF AREA #19 - KELOWNA APPELLANTS/RESPONDENTS Appeal Nos.: ; ; ; Refer to as: Robert A Johnson et al v. Area 19 (2007 PAABBC ) Date of Decision: September 11, 2007 Properties: Heard: Panel: Appearances: , 2702 Glenmore Road N, City of Kelowna , 3950 Glenmore Road N, City of Kelowna June 20 & 21, 2007, at Kelowna Paula Barnsley, Panel Chair Bill Ruzicka, for the Appellants/Respondents Katrina LeNoury, for the Assessor BACKGROUND Introduction [1] These are appeals from decisions of the 2006 and 2007 Property Assessment Review Panels. The Assessor is the Appellant for the 2006 appeals and Respondent for the 2007 appeal. Mr. Johnson and Peter and Sonja Rudy are the Respondents for the 2006 appeals and Appellants for the 2007 appeals. To avoid confusion, and because the appeals originated in 2006, throughout this decision when I refer to the Appellant I mean the Assessor, and when I refer to the Respondents I mean Mr. Johnson, the Rudys and/or their agent Mr. Ruzicka.

2 Page 2 [2] The appeals concern two separate properties located in the area of the City of Kelowna known as North Glenmore Highlands. The Respondent Robert Johnson owns one of the properties under appeal, a acre parcel at 2702 Glenmore Road N. (the Johnson Property ). The Respondents Peter and Sonja Rudy own the other property, a 14.1 acre parcel at 2702 Glenmore Road N. (the Rudy Property ). [3] Vaclav (Bill) Ruzicka, the Respondents advocate on these appeals, is a bee-keeper who owns a parcel of land at 2910 Glenmore Road N. ( Ruzicka Property ), the home base for his bee-keeping (apiculture) operation. Mr. Ruzicka has agreements with the owners of neighbouring parcels of land within a 3 kilometre radius of the Ruzicka Property, including the Johnson and Rudy Properties, for placement of bee hives and forage for bees. The Assessor accepts that the written agreements relating to the Johnson and Rudy Properties are leases in the form prescribed in the Standards for the Classification of Land as a Farm (BC Reg. 411/95) ( Farm Class Regulation ). Mr. Ruzicka says that his agreements with other neighbouring landowners are similar and he refers to these as leases as well. In total Mr. Ruzicka s lease arrangements with neighbouring property owners cover approximately 1,000 acres. Most of the land that Mr. Ruzicka leases is ranch land that has Farm classification independent of the lease arrangements. The Johnson and Rudy Properties are exceptions. These appeals are about whether the portions of the Johnson and Rudy Properties that Mr. Ruzicka leases qualify for Farm classification on the 2006 and 2007 assessment rolls as part of Mr. Ruzicka s farm operation. [4] The Johnson Lease states that the leased area is 60 acres of the Johnson Property, and that the use of the leased area is for pasture (understood to mean for bee forage) and for a fenced and equipped mating bee yard with capacity for 1,500 mating units. Mr. Johnson s home and his own farm operation, a greenhouse, are located on the part of the Johnson Property that Mr. Ruzicka does not lease. The Rudy Lease states that the leased area is 13 acres of the Rudy Property, and that the use of the leased area is for a base bee yard and forage for 80 colonies. The Rudy home is located on the 1.1 acre that Mr. Ruzicka does not lease. Mr. Ruzicka has placed bee hives surrounded by a fence ( enclosed bee yard ) on a.25 acre portion of each of the Johnson and Rudy Properties. [5] Special rules for classification of leased land as a Farm are set out in section 7 of the Farm Class Regulation. The Assessor contends that the.25 acre enclosed bee yards are the only parts of the Johnson and Rudy Properties that qualify for farm classification of leased land. The Assessor s position is that land leased for use as bee

3 Page 3 forage does not meet the criteria for Farm classification. The Respondents position is that Mr. Ruzicka uses all of the land he leases from Mr. Johnson and Mr. Rudy and, whether used as bee yard or bee forage, all of the leased lands meet the criteria for Farm classification in section 7. [6] In December 2004 the British Columbia legislature enacted changes to section 4 of the Standards for the Classification of Land as a Farm (BC Reg. 411/95) ( Farm Class Regulation ) in relation to land that has no present use but is part of a farm. Different eligibility criteria are prescribed, depending on whether or not the land that has no present use is located within or outside the Agricultural Land Reserve ( ALR ) (Farm Class Regulation, sections 4(3) and (3.1) respectively). The Respondents position is that if the leased portions of the Johnson and Rudy Properties that are outside the fenced bee yards do not meet the criteria in section 7 of the Farm Class Regulation, then they qualify for farm classification as land that has no present use under sections 4 (3) or 4(3.1). The Assessor accepts that the acre part of the Johnson Property that is in the ALR qualifies for Farm classification under section 4(3), but submits that the leased part of the Johnson Property that is not in the ALR and the leased part of the Rudy Property do not meet the criteria in section 4(3.1). [7] As required by the Assessment Act, R.S.B.C. 1996, c. 20, section 6, the Assessor prepared the 2007 assessment roll by December 31, At that time this Board had not yet heard the Assessor s appeal of farm classification for the Johnson and Rudy Properties for On the 2007 roll the Assessor classified as Farm only the acres of the Johnson Property that is in the ALR, and the.25 acre of the Rudy Property used as a fenced bee yard, consistent with the Assessor s position before the 2006 Review Panel. Mr. Ruzicka, as agent for Mr. Johnson and the Rudys, appealed to the 2007 Review Panel, which declined to hear the appeals because of the pending hearing of the 2006 appeals before this Board. As the issues are identical, the appeals of the 2007 roll classification were added to the appeals now before this Board. [8] Mr. Ruzicka submits that if the Assessor is allowed to add the 2007 appeals to the 2006 appeals, then I should re-open the 2005 appeal of the Johnson Property and apply the ruling I make on this appeal to the 2005 roll. I have no jurisdiction to re-open the 2005 appeal, which was decided by this Board (Johnson v. Area 19, (2006 PAABBC )), and upheld by the British Columbia Supreme Court on stated case. History - Johnson Property [9] Mr. Johnson is 80 years old and has lived on the Johnson Property for more than 50 years. Initially he grew strawberries and apples, but had to convert to ranching in

4 Page after his application for irrigation water from the neighbouring Glenmore Reservoir was refused. Around 1970 Mr. Johnson sold a few acres to three immigrants from Czechoslovakia, one of whom was Mr. Ruzicka. After several years of drought and a further refusal of irrigation water, Mr. Johnson discontinued his cattle ranch operation in the early 1980s. He started a greenhouse and leased the back of his property to Mr.Ruzicka, who had developed an apiculture (beekeeping) operation. The farming use of his property has not changed since then. Mr. Johnson continues to operate his greenhouse, as well as a field of asparagus, and to lease the remainder of his property to Mr. Ruzicka. Mr. Johnson intends to live on the Johnson property as an active farmer until he dies. [10] Historically the whole of the Johnson property was classified as Farm on the annual assessment roll. In June 2004 the Kelowna office of BC Assessment sent letters to approximately 425 owners of properties classified as Farm, requesting completion and return of a Farm Land Review Production and Income Statement, along with farm income information for 2003 and Mr. Johnson delivered the requested information, including his lease agreement with Mr. Ruzicka. The lease was not in the form required by section 7 of the farm Class Regulation, and a new lease agreement that complied with section 7 was provided a few days later (the Johnson Lease). Income information relating to the greenhouse operation was unclear. Based on the information provided, the Assessor applied a split classification to the Johnson Property for the 2005 assessment roll, classifying as Farm only the.75 acre area indicated in the Johnson Lease as being used as a bee yard. The remainder of the Johnson property was classified Residential. Although a significant portion of the Johnson property was in the ALR, Mr. Johnson did not submit the owner s certification necessary to qualify under section 4(3) for Farm classification of land with no present use. Presumably Mr. Johnson did not consider his land to be unused because of the lease for Mr. Ruzicka s apiary operation, and given the history of the whole of his property being classified as Farm he likely did not expect a change in classification without a change in use. [11] The removal of Farm classification significantly increased Mr. Johnson s property tax liability. After he received his assessment notice for 2005, Mr. Johnson requested an explanation for the classification change. He was provided with information about submitting a review to the 2005 Review Panel, and advised to do so. An employee of the Kelowna Assessment office inspected the Johnson property in mid-february, a few days before the Review Panel hearing. The inspector took photographs of the fenced bee yard, buildings, stored hay and a horse. At the Review Panel hearing, Mr. Johnson advised that his niece owned the horse and paid him around $900 annually to board the horse. Mr. Johnson must have clarified his income from the greenhouse operation, as Review Panel classified 2 acres of the Johnson property as Farm (1.75 acres for the

5 Page 5 greenhouse operation and farm residence, and.25 acre for the bee yard). Mr. Johnson, represented by Mr. Ruzicka, appealed to this Board. The appeal was by written submissions, and the Review Panel decision was confirmed in Johnson v. Area 19, supra, rendered January 19, The Board decision was subsequently upheld on a stated case (Johnson v. Assessor of Area 19 - Kelowna (2006) Stated Case 505 (B.C.S.C.), rendered September 6, 2006). [12] Mr. Johnson submitted the section 4(3) owner s certification to BC Assessment in July 2005, effective for the 2006 assessment roll. In August 2005 Mr. Johnson sold an acre portion to an adjoining landowner, reducing the size of the Johnson property from acres to acres. The portion that was sold was within the ALR. In October 2005 Mr. Johnson submitted a completed application for Farm classification showing the new size of the Johnson property and indicating income of $3,490 from the greenhouse operation in The Johnson Lease was still valid as it showed an expiry date of April [13] The Assessor applied a split classification on the 2006 roll, with 2 acres classified as Farm and the remainder as Residential. The 2006 Review Panel classified as Farm the entire Johnson property, and the Assessor is now appealing that decision. [14] At the request of the Assessor the 2006 Review Panel corrected the roll value of Mr. Johnson s farm land from $652 to $3,900. Mr. Ruzicka objects to this increase on the grounds that the Assessor did not give notice prior to the Review Board hearing and that the increase is has no validity in the legislation. History - Rudy Property [15] Around the time that he started his beekeeping operation in 1980, Mr. Ruzicka placed hives on a property adjacent to what is now the Rudy Property under an agreement with the owner. At that time the Rudy Property was part of a much larger parcel of land known locally as the Serva Ranch, and Mr. Ruzicka also had an agreement with the owner of the Serva Ranch regarding use of ranch land vegetation to supply nectar and pollen for bees. Both the Serva Ranch and the adjacent property where the hives were placed were classified as Farm independent of their use for Mr. Ruzicka s bee keeping operation. [16] At some point in the late 1990s the Serva Ranch was subdivided and the subdivided parts were distributed among surviving family members of the original owner. Some of the subdivided land lost Farm classification, including the Rudy

6 Page 6 Property. The first owner after the subdivision built a house (in 1998) and lived on the Rudy Property. [17] In 2002 the property adjacent to the Rudy Property where Mr. Ruzicka had placed hives was sold and the new owner, who operates a chicken farm, ordered Mr. Ruzicka to remove the hives from the property. The hives were moved a short distance from their original placement, to the northeast corner of the Rudy Property. [18] In September 2003 the first owner of the Rudy Property applied to the Assessor for Farm classification based on a lease of the entire Property to Mr. Ruzicka as a bee yard and forage area for 80 colonies/hives. (A colony is comprised of an egg-laying queen, worker bees and drones that are housed in a hive. Hive and colony are commonly used interchangeably.) The Assessor inspected the Property and approved a split classification for the 2004 roll, with the.25 acre enclosed bee yard receiving Farm classification and the remainder as Residential. The Review Panel and this Board confirmed the Assessor s classification for 2004 (Ruzicka v. Area 19 (2004 PAABBC )). [19] The Rudys purchased the Rudy Property around the end of July 2005 with a view to developing a Christmas tree farm on retirement. They have been approached to lease the part of the Property that is now subject to the lease with Mr. Ruzicka for cattle grazing. Mr. Rudy testified that he has this option and would not lease the land to Mr. Ruzicka without the term in the lease that Mr. Ruzicka is responsible to pay the property tax on the leased land. [20] When the Rudys purchased the Property, the bee yard remained on the Property but the previous owner s appeal to this Board of the classification for the 2004 was not yet finalized. In October 2005 Mr. Rudy delivered an application for Farm classification to the Assessor. The Rudy Lease, which expires in 2023, was included in the application. The Assessor applied a split classification on the 2006 roll, with.25 acre classified as Farm and the remainder as Residential. The 2006 Review Panel held that all but.5 acre of the Rudy Property (home and yard area) met the requirements for Farm classification of leased land under section 7 of the Farm Class Regulation, and the Assessor is now appealing that decision. ISSUES [21] The issues on these appeals are:

7 Page 7 Does the portion of the Johnson Property that is subject to the Johnson Lease and is not in the ALR (22.14 acres) meet the criteria for Farm classification of leased land under section 7 of the Farm Class Regulation? Does the portion of the Rudy Property that is subject to the Rudy Lease (13 acres) meet the criteria for Farm classification of leased land under section 7 of the Farm Class Regulation? Alternatively, if the leased portion of the Johnson Property outside the ALR and the leased portion of the Rudy Property do not meet the criteria in section 7 of the Farm Class Regulation, do they meet the section 4(3.1) criteria for land not in the ALR that has no present use? [22] Mr. Ruzicka also raised the issue of the increase in value of Mr. Johnson s farm land made by the 2006 Review Board on an Assessor recommendation without notice to Mr. Johnson, and I will dispose of this now. In Bill s Honey Farm v. Area 19 (2006 PAABBC ), at paragraphs 44-46, I discussed the issue of proceeding on an Assessor recommendation without notice to opposing parties. While the Assessor is required to give some notice of a recommended change other than the types of changes listed in section 35(3) of the Assessment Act, failure to do so is a procedural error that is cured with the opportunity to be heard before the Board. I have heard both parties on the issue, and I am satisfied that the Assessor was simply correcting an historical error on the roll that had not been noticed until a change in the title of the Property following the sale of a portion to an adjoining landowner in I will not interfere with the value of Mr. Johnson s farm land as corrected by the 2006 Review Panel. RELEVANT LEGISLATION [23] In Cherry Creek Ranches v. Assessor of Area 23 Kamloops (1999 PAABBC ), the Board held that the requirements in the Farm Class Regulation are properly analysed separately and in the following sequence: 1. Is the land or part of it used for primary agricultural production: sec. 4(1)? 2. Is this a farm operation under section 4(4)? 3. Does the farm operation, rather than each parcel, meet the minimum gross annual value requirements under section 5? 4. Is the parcel or part of a parcel necessary to the farm and predominately used for agricultural production (section 4(2))? 5. If the land is leased, is the land used for primary agricultural production and does it make a reasonable contribution to the farm operation (sec. 7(3))?

8 Page 8 [24] The Assessor agrees that Mr. Ruzicka s apiculture operation and Mr. Johnson s greenhouse operation are farm operations under section 4(4) and that these farm operations met the gross annual value requirements in section 5 for the 2006 and 2007 assessment years, so questions 2 and 3 are not raised on this appeal. [25] Although the analysis leaves the criteria for leased land to the 5 th question in the sequence, questions 1 and 4 are subsumed in question 5. In Cherry Creek, supra, the requirement in section 7(3) that the land is used for primarily agricultural production was interpreted to mean that the land must be used for primary agricultural purposes and no other purpose, and the requirement that the land make a reasonable contribution to the farm operation was interpreted to be a higher test than "necessary to the farm" in section 4(2). Thus if the criteria for leased land in section 7 of the Farm Class Regulation are met, the land that Mr. Ruzicka leases from Mr. Johnson and/or the Rudys will qualify for Farm classification. [26] A sixth question, or set of questions, arises if the land has no present use and is part of a parcel, a portion of which is used for primary agricultural production. In these circumstances, the criteria in sections 4(3) or 4(3.1) of the Farm Class Regulation must be considered. Leased land requirements [27] The criteria for classification of leased land as a farm are set out in section 7 of the Farm Class Regulation: 7 (1) In the case of leased land, a copy of the lease document must be submitted to the assessor on or before October 31 in order for the land to be classified as a farm. (2) The lease document must contain the names and signatures of the lessee and lessor, the legal or other well defined description of the land being leased, the commencement date, the signing date, the duration of the lease, the lease area, the intended use of the leased land and the consideration for the lease. (3) To be classed as a farm the leased land must (a) be either (i) used for primary agricultural production and make a reasonable contribution to the farm operation, or (ii) certified by the owner, on the form prescribed for the purposes of section 4 (3) (b), as being held for the purpose of primary agricultural production, and (b) be m 2 or greater except if (i) the land is in the Agricultural Land Reserve (ALR), and (ii) despite section 4 (3), the land is used for primary agricultural production.

9 Page 9 (4) Despite section 5 and section 7 (1), in the case of leases of Crown land issued after October 31, the assessor must classify all or part of the land as a farm if (a) the application form referred to in section 3 is delivered to the assessor on or before December 31, and (b) the assessor is satisfied that the farm meets the other requirements of this regulation. Requirements for land that is part of a farm but has no present use [28] The criteria for Farm classification of land outside the ALR that has no present use are set out in section 4(3.1) of the Farm Class Regulation: 4 (3.1) Despite subsections (1), (2) and (3), the assessor must classify land as farm if (a) the land has no present use, (b) the land has a highest and best use that is a use not better than that of a farm, (c) the land is part of a parcel, a portion of which is used for primary agricultural production, and the portion used for the primary agricultural production makes a reasonable contribution to the farm operation, and (d) the portion being used for primary agricultural production meets the other requirements of this regulation. EVIDENCE [29] I heard evidence from the following witnesses called by the Assessor: Evelin Irons, appraiser with BC Assessment Paul van Westendorp, Provincial Apiculturist, BC Ministry of Agriculture & Lands John Gibeau, bee keeper and President of the Honeybee Centre and the following witnesses called by Mr. Ruzicka (for the Respondents): Bill Ruzicka, beekeeper, owner of Bill s Honey Farm and agent for Respondents Peter Rudy, Respondent Fred Steele, fruit grower David Stirling, fruit grower and Director of Okanagan Cherry Grower s Association Howard Joynt, agrologist and farm management consultant, formerly with BC Ministry of Agriculture John Gates, retired apiculture specialist for BC Ministry of Agriculture Eain Lamont, bee keeper with experience as entomologist Stan Reist, beekeeper

10 Page 10 [30] Mr. Johnson did not testify because of his age and a speech impediment. He provided written evidence, in question and answer form, which I accepted without objection from the Assessor. [31] Mr. van Westendorp, Mr. Gibeau, Mr. Ruzicka, Mr. Gates, Mr. Lamont and Mr. Reist were qualified as experts in various aspects of apiculture, based on their training and/or extensive experience. Mr. Steele and Mr. Stirling were qualified as experts in fruit growing and pollination. Mr. Joynt was qualified as an expert in agriculture and government agricultural policies. Mr. Ruzicka gave notice that he would be calling Kerry Clark, a beekeeper with over 40 years experience and agrologist employed with the BC Ministry of Agriculture since Mr. Clark was unable to attend but provided a brief letter addressed to the Board that was included in the Respondents submission (Exhibit No. 4). The Assessor had no objection to the admissibility of Mr. Clark s letter. [32] This appeal was originally set for hearing by written submission, and the documentary evidence before me includes the parties original written submissions (Exhibits No. 1, 2 and 3 (Assessor), Exhibits No. 5 and 7 (Mr. Ruzicka for the Respondents). In compliance with an order for pre-hearing disclosure, Mr. Ruzicka provided a tabbed bundle of materials with further submissions and various documents including documents provided by, or relating to, the Respondent s expert witnesses (Exhibit No. 4). The Assessor s pre-hearing disclosure included documents prepared by Mr. van Westendorp and Mr. Gibeau (Exhibits No. 16 and 18). Several documents were presented at the hearing, including various maps (Exhibits No. 6, 10, 11), letters (Exhibits No. 13, 15, 17 and 19) and a newspaper article (Exhibit No. 20). During the hearing I watched two video tapes entitled One Year in Okanagan Beekeeping and Bill s Honey farm Dave Yard (Exhibits No. 8 and 9), presented by Mr. Ruzicka. [33] In the Discussion and Analysis I have set out the relevant facts and my findings on each issue based on my review of all of the evidence and the parties submissions, although not all of the evidence and submissions are described in detail. DISCUSSION AND ANALYSIS Ruzicka Apiculture Operation [34] The ridge between Okanagan Lake and Kalamalka, Duck and Wood Lakes and between Kelowna and Winfield is known as the Glenmore Highlands. It has an arid climate, mostly sunny and dry with an average annual rainfall of about 8 inches. The part of the Glenmore Highlands where Mr. Ruzicka s apiculture operation is located has

11 Page 11 been used for beekeeping for over 100 years. It is the only part low enough in elevation to allow early forage for bees. The steep slopes and ravines of the Glenmore Highlands are difficult for cattle to access, but have a variety of vegetation that is suitable for bee forage. The area is not a great honey producing area, but has proven to be an excellent area for bee breeding and stock production. [35] Mr. Ruzicka s is a large apiculture operation, with an annual average income in the range of $90,000 to $100,000. The apiculture operation includes five bee yards that are in use year round and three yards at higher elevations that are used only in summer (April to August). Four of the five year round bee yards are located on the west side of Glenmore Road, including the bee yards on the Ruzicka Property, the Johnson Property and the Rudy Property. The fourth is located on a parcel of land, identified by Mr. Ruzicka as part of Mr. Gautier s ranching operation ( Gautier Ranch ), which abuts the Johnson Property. Three of the four bee yards on the west side of Glenmore Road are relatively close together (roughly.5 kilometres apart) and are near the Glenmore Reservoir. The bee yard on the Rudy Property is further away, about 3 kilometres from the Ruzicka home base. A small part of that fenced bee yard encroaches on a neighbouring parcel that is part of the Gautier Ranch. Mr. Ruzicka accesses the hives on the Rudy Property through this part of the Gautier Ranch. [36] Mr. Ruzicka has a similar lease arrangement with the owner of the Gautier Ranch as he does with Mr. Johnson and the Rudys. In total he leases 513 acres on the west side of Glenmore Road, and most of this is the 5 parcels of approximately 438 acres that comprise the Gautier Ranch property. The Rudy Property is at the northeast corner of the leased 513 acres, and its south and west boundaries abut the Gautier Ranch. Mr. Ruzicka does not lease the land to the north of the Rudy Property, although he did in the past. That property is a chicken farm and Mr Ruzicka testified that chemicals used in that operation are harmful to his bees. The west and north boundaries of the Johnson Property abut the Gautier Ranch, and the Glenmore Reservoir to the south. To the east about one-half of the Johnson Property abuts Glenmore Road and the other half abuts the west boundaries of three small parcels including the Ruzicka Property. A small part of the irregular north boundary of the Johnson Property abuts a small parcel. Of the small parcels, only the Ruzicka Property has Farm classification. Mr. Ruzicka testified that he does not have lease agreements with the owners of the small parcels because any foraging there would contribute minimally to his apiculture operation. [37] The fifth year round bee yard is located about 3 kilometres from the Ruzicka home base bee yard on a large parcel of ranch land on the east side of Glenmore Road. Mr. Ruzicka leases 500 acres of the ranch land, which is independently classified as farm, for the bee yard and forage.

12 Page 12 [38] Mr. van Westendorp, apiculture expert called by the Assessor, testified that Mr. Ruzicka s apiary operation is typical in that it consists of a home-base plus other apiary sites away from the home base. The home site usually occupies a small land base, and the beekeeper drives to and from the different apiary locations for management, hive manipulations and other beekeeping activities. Mr. van Westendorp testified that bee keepers rarely own all of the land used in their apiculture operations, and leasing land, either from the Crown or private landowners, is common. Often the leased land qualifies independently for Farm status. Arrangements with neighbouring land owners are individual and varied. Payments may be small, especially if the land is farmed, because the land owner recognizes the benefit of crop pollination by the presence of the bees. [39] Mr. Ruzicka describes three of his five year round bee yards as developing yards. These are the yards located on the Rudy Property, the Gautier Ranch and the east side of Glenmore Road. They are used for developing colonies in the spring, for pollination preparation treatments, for pollination holding yards, summer development and mating of queens, honey production and wintering. They are accessible by bush road in small trucks, and cannot be accessed during winter snow. Mr. Ruzicka described his home yard and the Johnson bee yard as marshalling and nuking yards. These yards are used for the same functions as the other yards, but are also used to produce bee stock ( nuking is the production of nucleus colonies) for sale. The home yard is used as a marshalling yard during pollination because of its location next to Glenmore Road and its accessibility to large trucks. [40] The size of a bee yard varies through the year as new bee stock is produced. I accept the explanation by Mr. Gibeau, expert witness for the Assessor, that the fairest time for determining the number of hives in an apiary operation is in the fall because the number of hives varies over the year (including increased numbers over the summer raised for bee stock) and the fall number represents the core number that the beekeeper will winter to continue the operation the following year. (As I understand it, wintering in the apiary industry means the period from August or September through April that bee hives are in their wintering locations.) The smallest of Mr. Ruzicka s five year round bee yards is located on the Ruzicka Property. In the fall the home yard has 40 hives with a capacity for 100 hives. The bee yard on the Johnson Property has 80 hives in the fall and a capacity for 600 hives. The other three year round bee yards have 80 hives each in the fall. In May and June, when new bee stock is being produced, the hive population increases from 360 to about 800-1,000. The three summer yards each hold around 40 hives.

13 Page 13 [41] Mr. Ruzicka is recognized by his peers in the apiculture industry, including the Assessor s expert witnesses, as having excellent beekeeping knowledge and management skills. Mr. Ruzicka is particularly well known for his success in producing bulk bees for re-sale to other beekeepers, and for his development of products and methodology for biological control of parasitic mites that target honeybees. Sale of bee stock accounted for more than half of the income for Mr. Ruzicka s apiary operation in 2003 and Approximately 15% of income came from honey sales, and the remainder from pollination (providing hives temporarily to fruit growers when needed for crop pollination). Leased land requirements [42] The requirements for Farm classification of leased land in section 7 of the Farm Class Regulation have been set out above. Since the leased land is not Crown land, subsection 7(4) does not apply on this appeal. The Assessor has conceded that the Johnson Lease and the Rudy Lease are proper lease agreements in the prescribed form within the required time limit, satisfying sections 7(1) and (2). The land is greater than 8,000 square meters, so subsection 7(3)(b) is not an issue. The certification referred to in section 7(3)(a)(ii) applies only to land in the ALR. The Assessor has conceded that the acre portion of the Johnson Property in the ALR qualifies for Farm classification. Thus the only criteria in section 7 that is at issue is section 7(3)(a)(i). To be classified as Farm the leased land outside the ALR on the Johnson and Rudy Properties must be used for primary agricultural production and make a reasonable contribution to the farm operation. Is apiculture primary agricultural production? [43] Apiculture is included in the definition of primary agricultural production in the Farm Class Regulation (section 1 and Schedule A). Apiculture is not defined in the Assessment Act or regulations made pursuant to that Act. Apiculture is broadly defined on the British Columbia Ministry of Agriculture website as [t]he keeping and management of the honeybee. The Assessor agrees that this definition includes the production of honey, raising bee stock for sale, and pollination. However, the Assessor says that pollination is excluded from the definition of primary agricultural production for assessment purposes because it is a service and Schedule A of the Farm Class Regulation specifically excludes agricultural services. [44] As noted above, about 30% of the income from Mr. Ruzicka s apiculture operation is derived from orchard pollination. He provides honeybees to fruit orchardists in the Okanagan during the short but crucial time frames for pollinating various types of fruit

14 Page 14 trees, including apricots, cherries, pears and apples. Mr. Ruzicka provided a chart showing a schedule of pollination for his operation from 2000 to His hives are in orchards for pollination for no longer than 30 days (but only for a few days at a time in any one orchard) from the start of apricot pollination to the end of apple pollination. Generally hives start being moved to orchards in mid-april and the last hives are home in mid-may. [45] There is no doubt that the production of honey and raising of bees for sale are products of apiculture, and therefore primary agriculture production under the Farm Class Regulation. Because a significant part of his income comes from pollination, and he expects the proportion to increase in the future, Mr. Ruzicka requested that I should determine the issue of whether pollination is a product or a service. As Mr. Ruzicka s apiculture operation produces more than sufficient income from sales of honey and bee stock to satisfy the income requirement for Farm classification (Farm Class Regulation, section 5), resolving the question of whether pollination is a product or a service is not necessary to this appeal. In my view it is better to leave for another day issues that do not arise on the facts of the appeal before me. Are the leased areas of the Johnson and Rudy Properties used for primary agricultural production? [46] As discussed above, in Cherry Creek Ranches Ltd., supra, this Board held that to qualify for Farm classification leased land must be used for primary agricultural production and for no other purposes. The Assessor does not dispute that the fenced bee yard areas on the Johnson and Rudy Properties are used for primary agricultural production. There is no evidence of, or submission that, either the portion of Mr. Johnson s property that is not in the ALR or the leased area of the Rudy Property outside the bee yard are used for any purpose other than as a forage area for Mr. Ruzicka s bees. [47] I am satisfied by the evidence, including but not limited to the evidence of Mr. Gibeau, expert witness for the Assessor on beekeeping and forage behaviour, that the leased parts of the Johnson and Rudy Properties are used by Mr. Ruzicka s honeybees for forage. Mr. Gibeau made an inspection visit to Mr. Ruzicka s apiary operation and was satisfied that every square inch of the land that Mr. Ruzicka leases is used by Mr. Ruzicka s honeybees. Do the leased areas of the Johnson and Rudy Properties make a reasonable contribution to Mr. Ruzicka s apiculture operation?

15 Page 15 Prior Board decisions [48] This Board has previously considered the issue of whether land leased by beekeepers made a reasonable contribution to an apiculture operation, and in all cases the Board held that leased land used for a bee yard made a reasonable contribution to the farm operation, but land leased for bee forage did not. [49] Iron Mountain Investment v. Assessor of Area 12 Tricities / North East Fraser Valley, , PAAB, December 24, 1997 is the first Board decision relating to leased land for bee forage. Iron Mountain Investment owned 80 acres of land improved with a small log house (rented along with 1 acre of land) in a rural area of Maple Ridge in the Fraser Valley. Mr. Anderson, a principal of Iron Mountain Investment, made arrangements with a local beekeeper to have hives moved to the property and then applied for Farm status on the basis of prior lease arrangements made for the use of substantially all the property in the apiculture business. Mr. Anderson admitted that the land was leased to the beekeeper because Farm classification would save on property taxes. The hives were placed in a fenced area of 1 acre, but Mr. Anderson argued that the bees used the whole of the property for forage. The beekeeper testified that the primary use of the bees was for pollination services for which the hives are moved off the property during the pollination season and that the hives were placed on the property for wintering from July to April. There was evidence that during the wintering period bees rely on their reserves and are supplementary fed. The beekeeper testified that bees begin to forage before they are moved for pollination, in February/March, as the temperature warms. He did not know exactly where his bees foraged. The Assessor s evidence included a memo prepared by as BC Assessment employee of a telephone conversation with Mr. van Westendorp, the Assessor s witness in the present appeal. The memo stated that bees do not fly in winter and confine themselves to the hive, and in spring the hives are moved to berry and forage fields where the pollen necessary for reproduction becomes abundant. An employee of the Assessor visited the property 3 times - in November/96 (after the application for Farm status), in February/97 (after a copy of the lease was forwarded to the Assessor), and in June/97. During the February visit photos were taken that showed a For Sale sign offering 80 acres (out of ALR) Developmental Potential. At the June visit there were no hives visible and there had been substantial clearing of vegetation. The Assessor concluded that the land occupied for storing hives over winter (1 acre) met the requirements of section 7 of the Farm Class Regulation, but the remaining 78 acres did not make a reasonable contribution to the apiary operation. The Board agreed with the Assessor that there was insufficient evidence that the bees used the 78 acres for forage. Based on the evidence that clover (similar or better forage) was available

16 Page 16 across the street and in close proximity to the hives, and that during the winter the bees were dormant and supplementary fed, the Board concluded that contribution of the 78 acres to the apiary operation was minimal and not critical to support the hives. [50] The Iron Mountain case illustrates that there is potential for landowners of property that is ripe for development to avoid significant tax liability for the property by leasing the land for use in a farm operation. Leasing land for apiculture is attractive to landowners because the land can be left in its natural state other than a small area fenced for enclosing hives. Such arrangements are, quite reasonably, of considerable concern to the Assessor for their potential for eroding the tax base, particularly in areas where urban development is encroaching into rural areas. [51] Mr. Ruzicka submits that the only similarity between the circumstances in the present appeals and the circumstances in Iron Mountain is that they involve bees. The bee yard in Iron Mountain was a wintering yard situated on an irrigated and flat property that was being held for development. The bee yards on the Johnson and Rudy properties are year round yards situated on non-irrigated land with landscape consisting of cliffs and ravines that has no development potential in the foreseeable future. Mr. Ruzicka says that the beekeeping operation in the Iron Mountain case, primarily pollination of berry crops in the Lower Mainland, is vastly different from Mr. Ruzicka s operation in the Okanagan. Mr. Ruzicka does some pollination, but it is in orchards and requires presence of bees for much shorter time. During the orchard pollination, some hives remain at the bee yards developing nucleus colonies for sale in late May. A significant part of Mr. Ruzicka s operation is bee breeding and sale of nuclei production and queens. Honey production is a sideline for Mr. Ruzicka s operation and produces only a small part of his farm income. Additionally, in Iron Mountain, the beekeeper was unable to determine where his bees were foraging, while Mr. Ruzicka says he can identify the exact sources and location of the forage areas used by his bees. Further, Mr. Ruzicka is seeking re-instatement of Farm classification for land that he has historically leased as bee forage, and is not colluding with an owner of property ripe for subdivision to avoid property taxation. (I should point out here that the Assessor on this appeal has not imputed any improper motive by Mr. Ruzicka, Mr. Johnson or Mr. Rudy in seeking Farm classification.) [52] The Iron Mountain decision was applied in the two later Board decisions relating to the Rudy and Johnson Properties. In Ruzicka v. Area 19, supra, the appeal of the 2004 classification of the Rudy Property, this Board expressed concern about the potential for a beekeeper and a landowner to collude in converting property to Farm classification by entering into a foraging lease. The Board found that the Rudy Property did not make a

17 Page 17 reasonable contribution to Mr. Ruzicka s apiary operation that is in any way separate or distinct from the contribution that might be made by neighbouring properties where the Appellant s bees might forage which are not subject to any lease arrangements whatsoever. In Johnson v. Area 19, supra, the appeal of the 2005 classification of the Johnson Property, the Board found the facts of the case to be similar to the Ruzicka case and held that there was insufficient evidence to support a conclusion that the leased land made a reasonable contribution to Mr. Ruzicka s farm operation. The Johnson appeal went to the Supreme Court of British Columbia on a Stated Case. Brooke J. declined to interfere with the Board s decision on substantive questions, including the question of whether the bees use of the land for forage made a reasonable contribution to the farm operation, on the grounds that the questions were of the weight and sufficiency of evidence, of fact or of mixed fact and law. [53] The Assessor referred me to two other previous Board decisions where beekeeping was considered - Dhont v. Assessor of Area 19 Kelowna, , PAAB, December 29, 1994 and Laucks et al. v. Area 01 (2004 PAABBC ). These are not leased land cases, and for this as well as other factors, I find these cases of minimal assistance to the issues on this appeal. [54] The Assessor argues that the Board s prior decisions set a precedent that only land leased for use as a bee yard makes a reasonable contribution to an apiculture operation, and I should follow this precedent because it is both reasonable and can be applied consistently throughout the province. I do not understand the prior Board decisions as setting a general precedent that land leased for bee forage can never make a reasonable contribution to the apiculture operation. I understand and appreciate the concern expressed in these decisions that any property owner could enter into a foraging lease with a beekeeper and thereby convert the owner s land, or a portion of it, to Farm status. However, in each case the Board Panel applied the section 7 requirements for Farm class to the evidence and found that the evidence was insufficient to support a conclusion that land used for bee forage made a reasonable contribution to the apiculture operation. Proposed formulae for determining reasonable contribution [55] Both the Assessor and Mr. Ruzicka propose formulae for calculating the area of leased land that makes a reasonable contribution to an apiary operation and should be allowed Farm classification. [56] The Assessor s formula is based on the testimony of his expert witness, Mr. Gibeau. The formula presumes that only a bee yard should be classified as farm,

18 Page 18 but proposes that a bee yard is not simply the fenced area around hives. The fencing is simply to protect the hives from predators and/or vandals, and it is economically advantageous for the beekeeper to enclose as small a space as possible. A larger area of land around the hives is necessary for access to hive pallets, placement of pallets, space between pallets, machinery movement (hives are moved frequently up to 11 times a year according to Mr. Gibeau), storage of food and equipment, and for bee cleansing (voiding body waste). The area designated as a bee yard should include the land that is used for these purposes, as these are mandatory to an apiary operation. [57] Based on his experience in placing hives for his own 400 hive apiary operation in the Fraser Valley, Mr. Gibeau proposed a formula of.03 acre per live colony (counted in the fall) as a reasonable estimate of the amount of land needed for a bee yard. By Mr. Gibeau s formula, Mr. Ruzicka s 80 hives on each of the Johnson and Rudy properties would each require a bee yard of 2.4 acres, but in his testimony Mr. Gibeau suggested rounding this to 3 acres. [58] Mr. Ruzicka proposed that the amount of land needed for an apiary operation of more than 40 hives is 4 acres per hive. This includes both bee yard and forage area, and 1 acre per hive for a buffer zone. By this formula, Mr. Ruzicka s 360 hive operation would require 360 x 4 = 1440 acres. If the bee yard is located on soil that is classified as Class 6 or 7 under the Land Values for Farm Land Regulation, the land allotment should be increased by 25% and 50% respectively. [59] While either Mr. Gibeau s or Mr. Ruzicka s formula would give the Assessor a simple guideline to apply in determining Farm classification for land used in an apiculture operation, I cannot, for the sake of simplicity, displace the criteria in section 7 (3)(a) of the Farm Class Regulation. Section 7(3)(a) requires that leased land make a reasonable contribution to the farm operation. My task is to determine whether the evidence before me supports a positive or negative answer to the question does the leased land on the Johnson and/or the Rudy Properties make a reasonable contribution to Mr. Ruzicka s apiculture operation? I do not have a mandate to set a formula that would effectively determine the section 7(3)(a) criteria on future appeals regarding land leased for apiculture operations. In Cherry Creek Ranches Ltd., supra, this Board found that what is a "reasonable contribution" will depend on the facts of each case, on the circumstances of the particular farm operation, and on the type of primary agricultural production. However, the extent of the use and reasonable contribution must be more than minuscule. Bee yard

19 Page 19 [60] Past decisions of this Board have distinguished between the bee yard and forage area in determining whether leased land makes a reasonable contribution to an apiary operation. I find this to be a sensible approach. Bee yard and bee forage areas have distinct uses in the apiculture operation, and the evidence that is relevant to determining whether they make a reasonable contribution to the apiculture operation is different. [61] Based on my understanding of apiary operations and land use requirements gleaned from the testimony of the expert witnesses who appeared before me, I accept Mr. Gibeau s explanation that a bee yard is larger than the fenced area that protects the hives from predators and/or vandals, and includes land around the hives that is used for access to hive pallets, placement of pallets, space between pallets, machinery movement, storage of food and equipment, and for bee cleansing. I am satisfied that land used for a bee yard as described by Mr. Gibeau would make a reasonable contribution to any apiary operation. While I cannot accept Mr. Gibeau s formula (discussed above) as a general rule for calculating the size of bee yards, I am hopeful that his description of what is included in a bee yard will assist beekeepers in the future in providing evidence that is relevant to calculating bee yard areas that comprise their apiculture operations. [62] The bee yard on the Johnson Property is within the part of the Property that is in the ALR and has Farm classification on the 2006 and 2007 rolls. Therefore, it is unnecessary for me to determine the exact area of the bee yard on the Johnson Property. [63] Both of the Assessor s expert witnesses, Mr. van Westendorp and Mr. Gibeau, testified that.25 acre is insufficient land to support 80 hives. Mr. Gibeau testified that allowing.25 acre for an 80 hive bee yard is ridiculous. Despite this evidence of his own witnesses, the Assessor says that the 80 hive bee yard on the Rudy Property is only.25 acre. The rationale is that access to the Rudy bee yard is through neighbouring property. The fenced bee yard on the Rudy Property encroaches slightly onto neighbouring Gautier property. Access to the fenced area is through a road that runs almost entirely through the Gautier property. While the whole of the bee yard is clearly not on the Rudy Property, I do not agree with the Assessor s submission that only.25 acres on the Rudy Property is used for bee yard purposes. 80 hives are located in the Rudy yard for wintering, and 40 remain through the summer. I infer from this evidence that hive pallets are moved. The video evidence I saw showed that machinery, including trucks and fork lifts, is used to move hives but I have no evidence as to whether the area used for machinery movement is on the Rudy Property or the neighbouring property. Mr. Gibeau s description includes an area for cleansing as well as for movement of pallets and machinery. Since most of the perimeter of the fenced area is on the Rudy