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Farmers cope with changes to Green Acres programALBANY, Minn. (AP)--For years, a tax-break program named after a popular 1960s TV show portraying idyllic rural life has allowed Jim Gondringer to keep his 164-acre dairy farm from being swallowed up by urban development. In the Green Acres program, Gondringer's land is taxed on its agricultural value, not on the price it could fetch on the market or what neighboring farms have sold for. That can be a sizable gap. For Gondringer, it meant paying property taxes this year on land valued at $451,000 instead of its true value of $874,000. "If it wouldn't be for that program, our taxes would be considerably higher," Gondringer said. "It's quite a difference in value." Now Gondringer and other central Minnesota landowners are wondering how changes the Legislature adopted earlier this year will affect their tax bill. Supporters have lauded the Green Acres program for helping to keep farmers farming instead of being forced off their land due to rising land values and property taxes. The program is popular in the St. Cloud area, and most farmers have at least some of their land enrolled. Stearns County leads the state with three-fourths of its agricultural land enrolled. "We kind of pushed Green Acres to help some of these people who really wanted to keep their farm land in ag use. It was keeping the tax base down for people who truly wanted to make a living off the land," said Don Pietsch, a Paynesville Township supervisor. But critics say the program has been applied inconsistently, with assessors in some counties not even giving landowners the option of enrolling. And not all of the land in the program is productive farmland. Owners of wooded hunting land and property targeted for future development have enjoyed the Green Acres tax break--not exactly what the program's creators had in mind. Armed with a report from the Office of the Legislative Auditor detailing the program's flaws, state lawmakers approved changes last session that tightened loopholes and made it tougher to keep land in Green Acres if it isn't being actively farmed. Some farmers are complaining that the changes are confusing and force them to make a hasty decision about whether to stay in the program--a decision that could have a significant financial impact down the road. Some question why any changes were necessary. "The intent was for those who want to continue to farm, the tax burdens wouldn't be so excessive," Gondringer said. "In our view, it's worked just fine." Minnesota has 29.5 million acres of land--58 percent of the state's total area--classified as agricultural. But over time, the state has lost farmland--2 percent from 1982-97 and an unknown amount since then, according to the legislative auditor's report released in February. About 4 million acres, or 13 percent of the state's farmland, is enrolled in Green Acres. Such farmland preservation programs reduced property taxes for landowners last year by $40 million, the report states. But it also notes that other property owners make up the difference by paying more in taxes than they otherwise would. That tax shift can be significant, especially in fast-growing areas where development pressure is driving up land prices. In Middleville Township in southwestern Wright County, residential homestead property taxes were more than 18 percent higher last year due to Green Acres, the legislative auditor's office estimates. Homeowners in Stearns, Benton and Sherburne counties paid 3 percent to 10 percent more. The report argues that Green Acres doesn't preserve farmland for the long term, since landowners aren't required to make future commitments. It recommends that the Legislature clarify who and what types of property should benefit from the program, and define what "primarily agricultural" land means. Last session, lawmakers changed the Green Acres law so land considered "nonproductive" no longer qualifies. Landowners have until the end of the year to decide whether they want to keep nonproductive land in the program or remove it and pay back the last three years' worth of tax benefit they received. "For some, it's big dollars, when you've only got a few months to get the money together," said Cyril Erkens, a Wakefield Township supervisor and a former farmer. And for those who choose to keep untillable land in the program, there's a hitch: If they decide to sell later, they'll have to pay back seven years' worth of tax savings--a bill that could amount to more than what they'd earn from the sale. "The problem is that payback, and that's going to hurt a lot of people," said Bob Spoden, a farmer and a Fairhaven Township supervisor. All 200 acres of Spoden's farm are enrolled in Green Acres, but only about 140 of that is productive, he said. Spoden isn't sure how the assessor will classify the rest, mainly woods and pasture. "Whether we plant the crop every spring or whether it's there for us to use as pasture, we are still using the land," he said. The changes have sparked concern that more farmers will sell their land or develop it, rather than pay the back taxes. And because land enrolled in the Conservation Reserve Program no longer qualifies for Green Acres, some wonder if farmers might take their land out of CRP as well. "If you're going to take these tax incentives off, it's going to force them to sell the land," said Bob Kroll, mayor of St. Augusta, home to numerous farms. It's possible legislators will try to tweak the law when they meet again early next year, said Rep. Larry Hosch, DFL-St. Joseph. Hosch was recently appointed to a new Agricultural and Open Space Preservation Task Force that is reviewing the Green Acres law. The recent changes did address the concerns raised in the legislative auditor's report, Hosch said. But "changing rules in the middle of the game" and negatively affecting landowners who went into the program with good intentions isn't fair, he said. Hosch wants the legislature to "hold harmless" landowners with property in Green Acres even if the land no longer qualifies, meaning they wouldn't have to pay the back taxes. He also wants to extend the deadline for landowners to decide whether to opt out of the program to give counties more time to provide them with information. Farmers need more time to consider how long they plan to stay on the farm and the implications of staying in or getting out of Green Acres, Erkens said. "It takes some time to really figure out what is the best option," he said. 9/29/08 Date: 9/19/08 Advertisement
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