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Some say Green Acres not be the place to be

Tim Power, who has a south Washington County shade tree nursery, tells a House committee that state law should treat businesses such as his more like farms than other businesses. Staff photo by Don Davis

ST. PAUL -- A 2008 law change threatens farmland across the state - from the Twin Cities suburbs to land bordering lakes and rivers - farmers Wednesday told a Minnesota House committee.

The new law penalizes farmers who want to sell farmland for other uses, the farmers said. The law could backfire and convince many landowners to get rid of some of their property, farmers added, or to turn sensitive land into cropland that would get a better tax break.

"We need to avoid large sums of back taxes," farmer John Hansmeier of rural Foley said.

The change means farmers no longer have as much of a financial incentive to keep land in farms, the committee heard, especially marginal land such as sloughs and other non-cropland property. However, witnesses said that even what looks like unused land is vital for the health of farmland.

The so-called Green Acres law gives farmers a lower property tax rate when land is used for crops, with the theory that it allows them to keep using the land for farming. In some cases, farmland sells for $3,000 an acre while the same land used for commercial or residential development could sell for $40,000, with similarly large differences in property taxes for the two uses.

Under the original law, when farmers sold their land for other uses - such as housing or business development - they often had to pay three years of higher taxes. Last year's law change forces sellers of what is known as non-productive farmland - areas such as sloughs - to pay property taxes for the past seven years.

"Farmers are making life decisions," Thom Peterson of the Minnesota Farmers Union said.

Hansmeier said farmers may find little financial reason to keep some land if they are forced to pay higher taxes when they sell it.

"Much of the land will be abandoned by the owners," he predicted.

Added Norman Varner of Buffalo: "I have never seen as many farmers concerned."

Many of those testifying on the subject at a House Agriculture Finance Committee meeting Wednesday were from the Twin Cities area, but committee Chairman Al Juhnke, DFL-Willmar, said farmers are affected around growing cities and other developments. "It's an issue wherever you have lakes and recreational property."

Juhnke, whose committee is to draw up a bill to change the law on Tuesday, said he expects something to pass this session. However, he added, resistance is strong to overturn all changes made last year.

Those changes were meant to convince landowners to keep land in farms, but many farmers at Wednesday's hearing said they did not hear about the changes until after lawmakers passed them. The changes only affect what the law considers non-productive land.

Ron Drude of Isanti County said the original lw was meant to save farms.

"This legislation is about preserving farms," he said.

"I'm very disappointed" with the changes, he added.

Several Washington County farmers told committee members that they are being penalized for keeping their farmland out of developers' hands.

"Our family has already given up a lot keeping the farm open," Neil Krueger of Lake Elmo testified.

The 50-acre Christmas tree farm he and his wife, Deb, own would be worth a lot if sold to developers, he added.

Even open land next to the trees is productive, Deb Krueger said. Marshes and other wetlands help prevent flooding, for instance, she added.

"What may be fallow land this year may be rotated with another species the next year," she added. "What affects once part affects the whole."

Juhnke said he agreed with the Kruegers, adding that several witnesses Wednesday showed there is a strong link between cropland and adjacent land that could appear to be non-productive.

Tim Power, who has a south Washington County shade tree farm, said that state law does not treat his operation as a farm, but it should. If so, his property taxes could be lower.

Rep. Rod Hamilton, R-Mountain Lake, said farmers such as Power "are good stewards of the land."

Lake Elmo farmer Peter Kastler said his grandmother lives on the home place and wants it to remain farmland.

"It is a place I cherish deeply," he said.

The family even opted to keep open some land next to a housing development, so homeowners would not need to deal with cows, tractors and other farm operations. But forcing the family to pay the equivalent of seven years of higher home property taxes just for keeping land open is not fair, he added.

John Baird, who lives in Washington County's May Township, said a recent county vote set aside funds to do outdoors-related things such as preserving critical stream banks. "The citizens of Washington County place a high value on open spaces."

The 2008 change could "force people to divest themselves of wooded land," he added.

Some of his land that would be considered non-productive, and would be assessed higher taxes if he sold the land, has produced six semi-trailer loads of wood, so it is productive land, he said.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.