- Equine property is being targeted for removal from Green Acres because of lingering questions whether pasture is an agricultural product raised for sale
The Minnesota Tax Court has ruled that it is. In Sommerdorf v. County of Sherburne, the Court explained that when a horse owner pays a boarding stable to a feed a horse, grazing the horse on pasture amounts to a sale of pasture as horse feed. It's no different than a U-Pick orchard or berry farm, only the horse does the picking.
But the story isn't over. The Sommerdorf case involved a dispute over agricultural classification. The question of pasture as an agricultural product raised for sale is now raised again with respect to Green Acres--Minnesota's Agricultural Property Tax Law, which artificially reduces the taxable value (and, therefore, property taxes) of property 10 acres or more that is devoted to raising agricultural products for sale so that people can afford to continue farming it. Green Acres requires that the property be 10 acres or more and "primarily devoted to agricultural use" and satisfy the ownership requirements in Minn. Stat. 273.111.
Equine property taxpayers throughout Minnesota, and especially in Washington County in the east Metro area, are facing this question again with urgency. As truth-in-taxation notices are being prepared to send out in November, many boarding and breeding stable owners find themselves paying such onerously higher property taxes that restoring Green Acres eligibility is a matter of life and death for their agricultural business.
What is Green Acres?
First, some background. The Minnesota statute popularly called Green Acres, Minn. Stat. 273.111, was first enacted in 1967 as a way to make farming an affordable land use. Whereas other property is taxed based on its highest and best use, which typically equates to its value if purchased for development, certain agricultural property qualifies for an artificial reduction in its taxable value as an incentive for people to farm it.
When Green Acres eligibility is revoked, the resulting tax increases are significant--and potentially devastating. An example is a parcel in Washington County terminated from Green Acres consisting of more than 10 acres of horse pasture. Valuation of that parcel went from a Green Acres valuation of $18,900 to a highest-and-best-use valuation of $299,300. For 2008-9 the owner paid $8 in property taxes. For 2009-10 it increased to $2,144.
Forcing farmers to pay thousands of dollars more in property taxes means that they will not be able to afford to use the land for farming. That is exactly the real estate market valuation problem that Green Acres was designed to address. So why are horse property owners being targeted, even after the legislative fix we got enacted last session? And what can they do about it?
Making the Case for Green Acres
As explained in my last newsletter, Washington County recently sent out detailed questionnaires to horse property owners demanding all kinds of detailed documentation and explanation to justify their continuing agricultural use of property. The question of Green Acres eligibility for horse pasture and equestrian property generally is a primary reason for the detailed inquiry.
On September 29, 2010 I wrote a letter to the County as government relations counsel for the Minnesota Horse Council explaining why the questionnaire is flawed and unduly burdensome. I received an email from one of the County assessors on Monday of this week acknowledging a very low response rate to the questionnaire and requesting my help in gathering relevant information. Washington County will be examining equine properties the week of October 18-22, so the sooner this information is submitted, the better.
Here is what I recommend: First, read the Minnesota Department of Revenue's Fact Sheet guide for Green Acres eligibility, which is published on the Department of Revenue's web site. If you received the Washington County questionnaire, or if you have had agricultural classification and/or Green Acres eligibility revoked for your 2010-11 property taxes, then write a letter to the County Assessor explaining in detail your agricultural business use of your property. Explain how many acres it is, how much income is generated from your agricultural use or rental for an agricultural purpose, and how long you have been in that business. If your income is down because of the economy, explain. Enclose whatever documentation you can (Schedule Fs reporting farm income, business plan, web sites, diagrams, etc) that best makes the case for your continuing agricultural use of your land. If you raise or board horses and your only other agricultural product is horse pasture, explain that your pasture is devoted to grazing horses for the business purpose of boarding, breeding, or otherwise raising horses for sale.
Unfortunately, it is almost impossible for me to give more specific advice because of the diversity of property uses and configurations and agricultural businesses. Questions are bound to arise, and many people have voiced frustration over the burden of assembling so much information. I invite people to contact me for help. If enough people are interested, I will make myself available at some public location--a meeting room at a library, for example--for a presentation on how best to advocate for yourself by presenting information to substantiate your agricultural use of land. As a last resort, I am available for hire. I have several tax appeals pending that may resolve the question of horse pasture as an agricultural product qualifying land for Green Acres, but in the meantime we have only our powers of persuasion. Let's use them to the best of our ability.