The Tax Implications of Agricultural Preservation

Anyone interested in issues related to sustainability know that one of the greatest challenges facing proponents of sustainable planning practice remains the trend of sprawling development and consumption of agricultural lands along the periphery of metropolitan areas.  One popular method to protect these agricultural lands it the establishment of preservation programs in which land owners are given tax-relief as incentives to keep their land as open or natural spaces.  The video below illustrates how once such program (Rural Preserve Program) works.

Proponents of sustainability have certainly supported such programs because the preservation of open and natural spaces are important for the ecological health of our cities.  In addition to these findings, properties enrolled in preservation programs can use money saved by tax-relief to invest in local agricultural initiatives.

However, some have started to question the value of these preservation programs.  While owners of properties enrolled in such programs continue to pay less taxes, the rest of property owners must pay more to keep the same level of services and make up the difference.  In addition, owner of properties in the Metropolitan Agricultural Preserves Program are exempt from paying for special assessments, such as road and utility projects  Considering that these properties only have to remain in preservation for seven or eight years, many critics have stated that these programs do not do an adequate job preserving farmland for the long term.  These and other concerns were outlined in a report by the Office of the Legislative Auditor.  This report can be found here:

Agricultrual Preserves Report

Along with these findings, some have noted that many of the properties enrolled in these agricultural preservation programs are not in any danger of development in the foreseeable future, particularly in metropolitan areas that are not experiencing significant growth.  Thus, these fringe property owners are receiving a subsidy for conducting business as usual, while others must increase their taxes to bear the weight.  An article about use-valuation assessment also makes a case about the results of agricultural preservation.  This article can be found here:   

Wisconsin use-valuation assessment

Overall, the evaluation of these programs serve as excellent case studies about how state and local government use tax-relief.  These cases also show that not all use-valuation assessment is necessarily fair or equitable.  Regardless of where people stand on these particular preservation programs, it is clear that preservation through tax-relief does have challenges associated with it.  These programs must be carefully designed as to not offer subsidy where it is not necessary.