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  • From: "Tradingpost" <tradingpost@gilanet.com>
  • To: livingontheland@lists.ibiblio.org
  • Cc: nmgreens@yahoogroups.com
  • Subject: [Livingontheland] Closing loopholes in farmland tax breaks no easy task
  • Date: Sun, 04 Apr 2004 07:12:09 -0600

http://www.daily-times.com/artman/publish/article_10076.shtml

Closing loopholes in farmland tax breaks no easy task
By The Associated Press
Apr 4, 2004, 08:41 am

When agricultural appraisers from assessors offices around Colorado got
together to talk about water issues last fall, their conversation soon
turned to their greatest frustration: loopholes that allow
land-preservation tax breaks to go to developers.

“We all agreed that we need to do something with the state statutes,”
said Jane Penley, an agricultural appraiser from Elbert County.

But what?

In Colorado, and throughout the United States, farms are being scooped up
by developers who continue receiving the tax breaks until they actually
build on the land.

But recent efforts in about a dozen states to close loopholes in the laws
have gone nowhere, shut down in some cases by farmers concerned that their
own taxes will soar, and in others by developers who don’t want to lose
the break.

In North Carolina, where landowners are back-billed for 3 years’ worth of
taxes at the normal rate if they develop the land, an attempt to increase
the penalty to 10 years failed in last year’s legislative session.

There are no obvious solutions.

“It just seems like whatever they revise it to will be just as
problematic as it is now,” said Joshua Duke, a professor in the
University of Delaware’s Department of Food and Resource Economics.

For example, a study by Rutgers University concluded that increasing New
Jersey’s rollback penalty to 10 years would promptly cost the state more
than 100,000 acres of farmland because property owners would develop it
quickly to protect their capital gains. More than half of the state’s
farmers are “financially distressed,” the report said, and more than
half of the state’s farmland is owned by non-farmers.

Lawmakers in Hawaii changed the law in 2002 to make sure land receiving the
agricultural tax break was actually being used for farming.

Under the old system, all agricultural land value was set at $2,500 an
acre. The new rules, which took effect in September 2003, required all
farms to be appraised at fair market value (which can be very high in
Hawaii) and then taxed at a varying rate depending on how long the
landowner would commit to keeping the land in agriculture.

A lot of farmers didn’t understand the new rules, with its requirement
that they file plot plans, by Sept. 2, 2003, showing fields under
cultivation, calculate crop production values, and file a letter promising
how long the land would be dedicated to agriculture.

Those who failed to comply saw their tax bills skyrocket. For example,
Scott Chun faced a new tax bill of about $6,000, instead of the usual $350,
for the 10 acres where he grows banana apples.

By November, farmers jammed into lawmakers’ chambers demanding a change.
The law is being rewritten again this spring.




  • [Livingontheland] Closing loopholes in farmland tax breaks no easy task, Tradingpost, 04/04/2004

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