By Craig Moorhead
Special for the Argus
Many landowners who are enrolled in the Green Acres Tax Deferral will need to make some decisions this spring. The 2008 amendment to the program was changed again on April 3, 2009. The “clarifying changes” of 2009 have resulted in the creation of a new option called the Rural Preserve Property Tax Program.
In short, after May 1, 2013, only “productive” acres will be left in Green Acres. This is called class 2a land, and would typically include tilled, pastured or hayed areas. Houston County Assessor Tom Dybing said that the GA program will continue for class 2a land, but those acres will be taxed according to their agricultural value, which would be higher than non-productive land, but lower than full market value.
Class 2b is defined as rural vacant land which does not produce an agricultural product. Lumber does not qualify as an agricultural product under this classification system (according to the Minnesota Department of Revenue), so timbered areas are classed as 2b.
Those who have 2b acres grandfathered into Green Acres have a choice to make by May 1, 2010. They can leave those acres in the program until 2013, when they will be dropped from Green Acres (with a three year payback of the deferred taxes), they can remove the land from Green Acres before May 1, (in which case they will not have to pay back deferred taxes), or they can enroll their 2b acres in the RPPTP and receive a tax deferral similar to Green Acres.
The RPPTP is open to people who have land in Green Acres, or those who have land in an agricultural homestead. For non-homesteaded agricultural landowners, a program called Class 2c Managed Forest Land is available. That program is not a tax deferral, but would cut taxes by about one third for most non-homestead owners, according to Dybing.
The MFL program requires that the landowner have a forest management plan drawn up for the property, which will typically cost a landowner several hundred dollars, according to Root River Soil and Water Conservation District Manager Ralph Tuck.
For Green Acres landowners or agricultural homestead owners, there are some requirements to be met to get into the RPPTP. Enrolled land must total at least 10 acres, and be covered by a “conservation management plan” drawn up by an approved plan writer. This plan will place some limits on land use, according to Tuck.
No development will be allowed during the 10-year length of the contract, and a landowner is expected to give five years’ prior notice before pulling land out. Land that has a forest management plan in place will be able to use that as a conservation plan, he said. For everyone else, there will be some costs to draw up a plan, since the “approved plan writers” will be private contractors.
Tuck said that he doesn’t know how much these plans will cost landowners, since the program is still in it’s formative stage. He said that the cost will have to be less than that of the more in-depth forest management plans, which are partially subsidized. Plan writers will likely get some kind of a set fee plus a charge per acre, he said.
Landowners who choose to roll 2b Green Acres land into the RPPTP between May 1, 2010 and the 2013 assessment will not be required to pay back deferred taxes, Dybing said. Tuck also believes this to be the case, but cautioned that land going into the RPPTP will need to be enrolled with a plan in place before the 2013 deadline. The current GA program acres will still be subject to a three year payback of deferred taxes only when the property is sold, transferred or no longer qualifies for GA. Therefore, landowners who do not plan to make changes to their land or sell may want to do nothing before May 1, and sign up for the RPPTP.
Both Tuck and Dybing said that when a landowner enrolls land into RPPTP, they may want to consider leaving a few areas out of the contract. A 10-year contract with a five year notice is a long term commitment, they remind landowners. If a future building site might be needed, it may be best to leave it out of the agreement and just pay the higher taxes of that portion of your land.
“At this point there’s a lot of uncertainties,” Tuck said of the RPPTP. “They don’t know what the plan is going to be, what the plan is going to cost, what the covenant’s are going to say. In fact, our board was concerned enough about it to send a letter to one of our local legislators requesting that they extend that (May 1) deadline, because we don’t have all the answers.” Tuck said that some land in the program might even be eligible for some seasonal use as pasture, as long as it was protected during times when cattle would damage the trees. That’s just one of the uncertainties, he said.
An informational class on forest land programs will be held at Camp Winnebago on March 11. Hosted by the University of Minnesota Extension, the class is free, but advance registration is required. Call 507-536-6310.
State Representative Greg Davids has co-sponsored a bill with Representative Tom Eastland to return Green Acres to its “original intent”. When contacted recently, Davids admitted that passage of the bill during the current state budget shortage would be “an uphill battle… but it’s a fight I’m willing to make.” Davids cited large tax increases on farmers, some of whom he said would likely be driven out of business because of changes that have been made to Green Acres. “County assessors are supposed to be out making sure people are taxed fairly,” he said, “not spending all of their time on Green Acres.”
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