Green Acres changes impact landowners

• Green Acres

WHAT IS GREEN ACRES? The Green Acres Program provides property tax relief for owners of productive agriculture property in areas where the market value of land is being affected by development pressure, sales of recreational land or other non-agricultural factors.

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Douglas County landowners enrolled in the Green Acres program need to make sure to check their mailbox.

Today, Friday, March 5, the Douglas County Assessors Office mailed out letters explaining additional changes that were made to the Minnesota Agriculture Property Tax Law – Green Acres – by the 2009 Legislature.

Of the 1,200 Douglas County property owners enrolled in this program, 130 are affected by the changes and should be receiving the letters, according to Douglas County Assessor Keith Albertsen.

Along with the letter, which explains how each individual person is affected, landowners will receive an option sheet, fact sheet and a letter from the Minnesota Department of Revenue that explains the changes to the law and the options property owners have.

Basically, the changes made to the Green Acres program eliminated the seven-year tax deferment provision and added a new Rural Preserve property tax program.

But it’s not really that simple, said Albertsen.

He explained that the changes to the Green Acres law were made by the Legislature to correct perceived problems with “non farms” receiving deferment benefits intended for land being actively farmed. He added that for those property owners willing to commit to the new Rural Preserve program, they can continue to defer the taxes due to non-farm influences.

Albertsen said his office has been working on the somewhat complicated and subjective program for several months, figuring out which parcels would be affected by the changes.

The parcels of land that would be affected were determined based on criteria set by the state, he said.

By May 1 of this year, property owners who have land enrolled in Green Acres must make a decision as to what to do with the land that is enrolled in the program.

Ultimately, there are two decisions – withdraw some or all of the land by May 1 and pay the additional tax (or wait three years to withdraw and do a three-year payback) or enroll the property in the new Rural Preserve Program.

In essence, depending on what landowners choose to do, the different outcomes include:

•If all property is withdrawn from the program, the property will be assessed at its full market value for taxes payable the next year.

•If partial land is withdrawn, the acres no longer in the program will be assessed at their full market value for taxes payable the next year.

•If no changes are made to a property owner’s status, they will continue to receive a tax deferral on all land enrolled in the program until the 2013 assessment. At that time the land will be removed from the program. The removed acres will be assessed at their full market value for taxes payable in 2014. There will be a payback of the current and preceding two-year deferment.

Sound complicated? Albertsen said with the new changes, it has become a lot more complicated – especially with the addition of the Rural Preserve Property Tax program.

This new program provides property tax relief for qualifying owners of rural vacant land in areas where the market value of the land is being affected by development pressure, sales of recreational land or other factors.

If property owners enroll in the new Rural Preserve program, their land needs to stay in the program for 10 years, said Albertsen – even if it is sold or transferred.

If land is enrolled in the Rural Preserve program, landowners will continue to receive a tax deferral on their Green Acres lands until the 2013 assessment.

Taxes will continue to be deferred on the Green Acres and Rural Preserve enrolled acres, but there will be no payback as long as the land moves directly from Green Acres to the Rural Preserve program.

Albertsen noted that there is a cost to enroll in the Rural Preserve program. If landowners choose to do this, a conservation plan is required and a covenant recorded that limits the property use for no less than 10 years. The cost could vary, but will be a minimum of about $250.

So, how does Green Acres work?

For properties enrolled in the program, taxes are calculated for both the estimated market value (higher value based on highest and best use) and the agricultural value (lower value).

The difference is deferred until the property is sold or no longer qualifies for the Green Acres program.

When the property is sold, transferred or no longer qualifies, the deferred tax for the current tax payable year and the two prior years must be paid to the county. The deferred tax is paid not just to the county, it is to the school district and township or city as well.

Albertsen expects that when the letters are received, he will be hearing from the property owners that are affected. He said he would do his best to help each person and try to explain the changes.

If landowners have further questions, they can review the fact sheets on the Minnesota Department of Revenue’s website at www.taxes.state.mn.

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