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

I am interested in learning about 1. The SFIA program 2. Changes in the Green Acres program 3. The 2c Managed Forest Land Classification 4. Other Select all that apply

Press the # for statement(s) that apply to you. I am Select all that apply 1. A Forestland owner 2. Actively engaged in farming 3. Interested in reducing my property taxes 4. Interested in reducing my income taxes 1. A Forestland owner 2. Actively engaged in farming 3. Interested in reducing my property taxes 4. Interested in reducing my income taxes

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

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

The Sustainable Forest Incentive Act Updated October 2008

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

Why participate? Promote healthy, productive forests Protect forests from development

Payments and Enrollment At least $7.00 In $8.61 Enrolled in owners 706,676 acres

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

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

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

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

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

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

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

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 1 st Cannot not re-enroll for 3 years

Why SFIA? 1. Strongly Agree 2. Agree 3. Disagree 4. Strongly Disagree SFIA incentive payments recognize the public value that private forests provide.

I will not apply because 1. The covenant is too restrictive 2. The incentive is not high enough 3. If I try to sell the property buyers may not want SFIA 4. The program does not apply to me 5. Other

Information MN Department of Revenue (651) Frequently asked questions

Questions on SFIA?

Property tax classifications Rate %Class & Property Description a. Agricultural Homestead first $890,000 2a. over $890, b. Non-homestead Agricultural Land b. Timberland c. Managed Forest Land Seasonal residential recreat, non-commercial 4c(1) first $500,000 4c(1) over $500,000

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

Green Acres Payback 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

Green Acres Additional 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

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

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

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

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

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

Assistance  Contact DNR –Free assistance –List of plan writers  Pay a consultant or SWCD  Minnesota Association of Consulting Foresters

DNR priorities 1. Current plans <10 yrs 2. Existing plans >10 yrs –Following the plan 3. New plans 4. Existing plans > 10 yrs –No management

For more information Class 2c Managed Forest Land Applications at Your county assessor   MN DOR Drew Imes, State Program Administrator Drew Imes, State Program Administrator (651) (651)

Questions about Class 2c?