Thursday, February 19, 2009

Is Green Acres the place to be?

Green acres is the place to be
Farm living is the life for me

Land spreading out, so far and wide
Keep Manhattan,
just give me that countryside.

On Wednesday's class we talked about the role of different, or 'classified', property tax rates. These tax rates look at the type of land use on a given property, and assess the property at the corresponding rate. In Minnesota, for residential properties, tax rates vary between 1.0-2.0% for the property. With Agricultural residential land, the first acre (+ house and garage) are taxed at 1.0-2.0%, with the remaining acreage taxed much lower, from 0.45-1.5%. Non-homesteading agricultural lands are taxed at 1.5% flat.

The Green Acres program, also known as the Agricultural Property Tax Law, strives to lower the tax burden for farmers, especially those in high-growth areas facing development pressures. An example posted by the Land Stewardship Project estimates that farmers receive a 'use value' of approximately $3,600 per acre in tax breaks (the average value per acre of ag. land in MN is $13,800). That's a big help!

In 2008 the Office of the Legislative Auditor found that the eligibility standards for the Green Acres program were "outdated, difficult to implement fairly, or create inequities," leading to major changes. Starting at the beginning of January 2009, wetlands, woodlands, sloughs and other "non-productive" land is no longer eligible for lower tax rates through Green Acres. "Productive land" is now defined as 10 contiguous acres of productive agricultural land with products going for sale.

This has had large impacts on people with small acres of agricultural land (vegetable farms, seed farms, 10-chicken farms, etc), as well as people with woodlands and wetlands. In December, the Star Trib reported on landowners ripping out trees and woodlands in order to convert land to agricultural use (for hay or grass) and recoup state tax benefits.

As conservationists and farmers alike move towards campaigning for revisions to this program, questions surrounding the definition of 'agriculture,' 'productive,' and 'farm' will be up for re-definition, and our state's complicated tax system may not have an answer.


  1. Nice blog!

    I have two comments. First, the debates about the definition of "agriculture" make me wonder what is the real purpose of the property tax credit. Is it to encourage "agriculture production," to preserve "green acres," or the combination?

    Second, in the first paragraph it would be helpful to mention what those tax rates are. Are the numbers PT rates of MN counties, PT rates of MN cities, or "average" total property tax rates in MN?

  2. I read somewhere today that there's no "pure" private ownership of land. This post adds some point to the argument.