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Auditor: Minnesota Sustainable Forestry Act not sustainable

Minnesota’s effort to reward private forest owners with cash benefits for practicing sustainable forestry is poorly managed and may not be effective, the independent Legislative Auditor’s Office says.

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In an extensive review of the Minnesota Sustainable Forestry Act released last week, Legislative Auditor Jim Nobles said incentive payments made to landowners under the program are not tied to specific forestry goals.

And he said there’s little effort to make sure landowners’ forestry practices actually are sustainable as required by state law.

The program, enacted by lawmakers in 2001, is intended to help offset property taxes for landowners who keep their forest managed sustainably and open to loggers and the state’s wood-products industry, replacing a 1957-vintage property tax credit for forestland.

But in some cases landowners are getting more in state payments than they are paying in property taxes.

Between 2003 and 2013, the state made more than $44 million in payments through the program. The number of participants has increased each year, with 2,300 landowners and 730,000 acres enrolled in 2013.

The program offers $7 per acre to landowners who enroll their land in the program, obtain and follow a forest management plan and record a document that restricts development on the enrolled land.

Landowners who enroll more than 1,920 acres must allow public access, such as deer hunters. The program requires that land be enrolled for a minimum of eight years.

This year, participants received between 12 and 306 percent of their property taxes on the enrolled land. One landowner’s property taxes averaged $3.25 per acre, but their incentive payment is $7 per acre. Another, whose taxes on one parcel averaged more than $100 per acre, would receive the same per-acre incentive payment.

The state program depends too much on self-reporting with little third-party oversight or verification, the report notes. And, in some cases, landowners have violated the state law by developing the property in defiance of the regulation that the land be kept undeveloped.

The report suggests the Legislature require applicants to register forest-management plans with the Department of Natural Resources and the state Department of Revenue be given more tools to verify the status of the land before issuing payments.

Nobles said his office’s report is “critical of the state’s Sustainable Forest Act,” but added that Minnesotans should not misunderstand. The audit report “is not criticizing the concept of sustainable forest management. We are just questioning whether this particular tool” is the best way to maintain sustainable forests.

If the program is retained, Nobles recommends that the Legislature rework the law to tie the incentive payment amount to property taxes paid on that parcel or to actual sustainable forestry goals.

“We also recommend that the Legislature increase oversight and monitoring of participants and expand and clarify the program’s penalty options, among other recommendations,” the report notes.

More than 40 percent of Minnesota’s forested land is privately owned.

Forum News Service Capitol reporter Don Davis contributed to this story.