Property Tax Relief for Forest Landowners

1. Property Tax Relief for Forest Landowners Mel Baughman Extension Forester & Program Leader Mike Reichenbach Extension Educator University of Minnesota Department of Forest Resources

2. 23 I am interested in learning about • The SFIA program • Changes in the Green Acres program • The 2c Managed Forest Land Classification • Other Select all that apply

3. 24 Press the # for statement(s) that apply to you. I am • A Forestland owner • Actively engaged in farming • Interested in reducing my property taxes • Interested in reducing my income taxes • A Forestland owner • Actively engaged in farming • Interested in reducing my property taxes • Interested in reducing my income taxes Select all that apply

4. Introduction • Non-forest programs • Sustainable Forestry Incentive Act • Green Acres • 2c Managed Forest land

5. Non-forest programs • Refunds • Senior citizen property tax deferral • Seasonal recreational credit • Disability homestead • Disaster relief (area specific)

6. The Sustainable Forest Incentive Act Updated October 2008

7. Why SFIA? • 1/3 of Minnesota is forested • Nearly 50% is family owned • Wood • Recreation • Wildlife

8. Why participate? • Promote healthy, productive forests • Protect forests from development

9. Payments and Enrollment • At least $7.00 • In 2007 -- $8.61 • Enrolled in 2008 • 1010 owners • 706,676 acres

10. Eligibility • At least 20 contiguous acres • At least ½ must have trees OR • Be managed for trees • Approved forest management plan • Forest management guidelines

11. Eligibility continued • Property taxes paid • > than 1920 acres must allow non-motorized public access • No structures or CRP, CREP, RIM, Green Acres or Ag Preserves lands

12. Activity Apply for enrollment Decision on application Certification forms mailed Return certification form Incentive payment Deadline September 30th Within 90 days July 1 August 15th October 1st

13. Application process • File a covenant with the county • Complete Revenue Form TH1 • Attach copies of • Forest management plan map • Covenant on file with the county recorder • Property tax statement • Submit by September 30

14. I applied! Now what? • The DOR will notify you within 90 days • If denied, • Appeal process • Revenue will issue a document to release the covenant

15. Annual certification letter • July 1: Certification letter • requirements for enrollment are being met • report any changes to parcel information, • return signed certification by August 15 • October 1: Incentive payment • Payment is taxable income

16. What if I don’t follow the rules? • ALL property will be removed • Pay back payments received during past 4 years, plus interest • Covenant will remain in effect

17. How do I get out of SFIA? • File a written request after a 4 year waiting period • Withdrawal occurs 4 years after application is made • Lands are withdrawn on January 1st • Cannot not re-enroll for 3 years

18. 14 Why SFIA? SFIA incentive payments recognize the public value that private forests provide. • Strongly Agree • Agree • Disagree • Strongly Disagree

19. 25 I will not apply because • The covenant is too restrictive • The incentive is not high enough • If I try to sell the property buyers may not want SFIA • The program does not apply to me • Other

20. Information • MN Department of Revenue • http://www.taxes.state.mn.us/ • (651) 556-6088 • Proptax.questions@state.mn.us • Frequently asked questions • http://cfc.cfans.umn.edu/nryb/nrr/

21. Questions on SFIA?

22. Property tax classifications

23. 2a. Agricultural classification • 10 acres in active farming, <10 acres if used for • drying or storage of grain or farming equipment from the same farm operation • Nursery production • Livestock or poultry confinement • Market farming • No RIM or CRP, grandfather exemption • Only includes productive land

24. Green AcresPayback period changes • 3 yr payback on productive acres that continue to qualify (same) • 3 yr payback on non-productive acres if sold, withdrawn or transferred before Jan 2, 2009 • 7 yr payback on non-productive acres sold transferred or subdivided after Jan 2, 2009

25. Green AcresAdditional Changes • Grandfather clause for ineligible land • Method developed to determine Ag value for land in Green Acres • Income qualifications eliminated • Clarification on corporations and partnership eligibility • Watershed district levies not deferrable • RIM and CRP not eligible

26. 2c Managed Forest Land • Available beginning 2008 • 0.65% property tax rate • Must apply to receive

27. Eligibility requirements • 20 contiguous acres • Max. 1,920 acres per taxpayer • Be unplatted property • Rural in character • Not used for agriculture • Active forest management plan • Not enrolled in SFIA program

28. Structures or multi-use • Nonresidential structure <300 sq. ft. OK • Parcel must be split classified if • any structure(s) totals >300 sq. ft • Structure is used as a residence • Improved building site • Forest and non-forest use on the property

29. Class 2c application procedures • Application form CR-2cMFL-08 • County assessor • MN Revenue website • Forest management plan • Apply to county assessor • Deadline not set -- MN DOR recommends May 1

30. Certified plan writers • provide application forms • determine eligible acres • provide a copy of your management plan • revise out-dated plans • write new plans • answer questions

31. Assistance • Contact DNR • Free assistance • List of plan writers • Pay a consultant or SWCD • Minnesota Association of Consulting Foresters www.paulbunyan.net/users/norfor/

32. DNR priorities • Current plans <10 yrs • Existing plans >10 yrs • Following the plan • New plans • Existing plans > 10 yrs • No management

33. For more information Class 2c Managed Forest Land Applications at Your county assessor www.taxes.state.mn.us • MN DOR Drew Imes, State Program Administrator (651) 556-6084 Drew.Imes@state.mn.us

34. Questions about Class 2c?