Florida Post-Legislative Update (05/06/2009)

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The 2009 Legislature made no changes to the Florida Greenbelt law.

This update focuses primarily on legislation impacting or potentially impacting agricultural property assessment and taxation.  This summary includes our comments, insight, analysis, and questions.

The bills containing the limitations on storm water fees and assessments on bona fide agricultural operations did not make it through both houses.

The working waterfronts legislation failed, also; the houses could not agree on the final language.  Working waterfronts legislation is required by one of the Constitutional amendments passed in the November, 2008, general election.

FS 193.023 was amended to allow county property appraisers, where geographically suitable, to use image technology (aerial photography and satellite imagery) in lieu of physical inspection for the statutorily required 5-year property inspection cycle.  The change requires the Department of Revenue to establish minimum standards.  The effective date is 7/1/2009.  We believe issues with Greenbelt classification inspections, approvals, and appraisals will surface from lack of physical inspections.

FS 194.301 was amended to clarify existing law.  The change is effective for 2009 assessments.  In assessment challenges by a taxpayer, the property appraiser will retain the presumption of correctness, if the property appraiser proves the assessment by a preponderance of evidence.  The taxpayer may overcome the property appraiser’s presumption of correctness by a preponderance of evidence showing the assessment does not meet the legal criteria.

Additionally, in FS 194.301, if the challenge by the taxpayer is a Greenbelt classification status denial, there is no presumption of correctness; and, the taxpayer has the burden of proving by preponderance of evidence that the Greenbelt denial to the property is incorrect.

A bill with a proposed Constitutional amendment also passed.  This proposal will limit the annual increase in assessed value of certain no-homestead exempt properties to 5%, and provide additional homestead exemption to certain buyers.

The most anticipated tax related legislation for agricultural properties was the required implementing legislation for (Conservation Use) Amendment 4, approved by voters in the November, 2008, general election.  The Constitutional amendment required the Legislature to provide (1) for a tax exemption for properties used for and dedicated in perpetuity for conservation purposes, and (2) for a current use assessment for conservation use properties not dedicated in perpetuity.

The House bill (HB 7157), as it started and ended, did not contain any reference or provisions for conservation use land not dedicated in perpetuity.  Provisions for non-perpetual conservation use, as related by a House staff analyst, are already contained in FS 193.501.

The Senate bill (SB 2244) was rather long and contained provisions for both perpetual and non-perpetual conservation easements and agreements.  The House version passed both houses.  The Department of Revenue will prepare the associated rules.  No specific new provisions are made in FS 193.501 for the current use valuation of conservation use properties not encumbered by a perpetual agreement or easement.  We can only speculate at this time as to any new rules or requirements for these non-perpetual conservation use properties.  We have several questions of our own and from the public relating to conservation use land not dedicated into perpetuity.  We will stay in touch with the Department of Revenue on this subject and provide updates as the information is available.

HB 7157 created one new section in the statutes and amended several others.  The remainder of this update covers this statutory addition and the statutory changes.

The bill created FS 196.26 and applies only to real property dedicated in perpetuity for conservation purposes.  It defines “dedicated into perpetuity” as irrevocable and perpetual.  It defines “conservation purposes.”  It defines “conservation easement” as the property right provided in FS 704.06, which defines a “conservation easement” as perpetual.  The Senate version would have changed the definition to include perpetual or a specific period.

The new law provides for a total property tax exemption for land dedicated in perpetuity for conservation purposes and used exclusively for conservation purposes.  It allows some income from the land for the purpose of maintenance (If specific limitations are not presented in the rules from the Department of Revenue, this could likely be a significant administrative issue).

A property tax exemption of 50% of the assessed value is provided for property dedicated into perpetuity for conservation purposes and used for allowable commercial uses, including agriculture.  Allowed commercial uses must follow established best management practices.  The issue here will be:  50% of what value?  Agricultural, if it is a Greenbelt property?  What if it is not Greenbelt property?  How will the assessments be determined?  Will a landowner apply for both Greenbelt and the Conservation Use assessment?  Several related questions come to mind.  Again, we will watch closely as the Department of Revenue prepares the rules.

Many parties will be surprised to see the provision for a partial assessment.  We advised many, and argued with many, over the last year that the Amendment 4 language was permissive, allowing for “an exemption” and not using the word “exempt.”  The terms are not equal. Terminology in the section of the Constitution providing for exemptions usually contains the word “exempt” for full exemption and “an exemption” can be either for full exemption or partial exemption, such as homestead.

The new statute provides for a 40-acre minimum, with certain exceptions, for conservation use classification, assessment, and exemption.  It also requires the conservation easement have baseline documentation.  Further, it provides for separate market value assessment for most buildings and curtilage on land with a conservation easement.

The statute provides the water management districts with third party enforcement if the easement holder does not enforce the easement terms.

FS 193.501 was amended to provide an application and appeal process for assessment of conservation easements.  It also was amended to provide for recapture for the preceding 10 years taxes plus 15% interest and a 50% penalty if land becomes ineligible for assessment as conservation land and the owner fails to notify the property appraiser.  This statute already contains provisions for payment of deferred tax liability in situations where the conservation easement is re-conveyed or released.  However, it does not appear to specifically cover recapture, penalties, etc., where the property owner properly notifies the property appraiser the land is no longer eligible for assessment as conservation land.

FS 196.011 was amended and provides for recapture for the preceding 10 years taxes plus 18% interest and a 100% penalty if land becomes ineligible for exemption as a conservation easement and the landowner fails to notify the property appraiser.  We have the same question here as we do with the new recapture provisions in FS 193.501.

FS 218.125 was amended to provide an offset, in fiscally constrained counties, for tax revenue lost from implementation of the constitutional amendments.

Georgia Post-Legislative Update (5/5/2009):

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The proposal to ease CUVA restrictions for family limited partnerships did not pass.

Few measures affecting agricultural assessments and taxation passed: One places a limitation on assessment increases for two years; another adds an arbitration option to the assessment appeals process; and, the most significant one extends the 2009 filing deadline to June 1 for the recently implemented Forest Land Protection Act ratified in the 2008 general election.  This latter legislation also adds the impact of conservation easements on land values as one of the assessment criteria.

Rules for the new Forest Land Protection Act (FLPA) are still in the proposal stage at this time.  2009 CUVA agricultural and timberland values and 2009 FLPA values are available.  Values have increased by approximately 2.5-3%.  FLPA values and CUVA timberland values are identical.

Greenbelt Denied? Application Disapproved?

 

Notice of Denial…!   Application disapproved…!

We can help!

Denials of Greenbelt applications and renewals must be mailed by the property appraiser no later than July 1.  The denial of all or part of the acreage in an original application (form DR-482) will be recorded on the bottom of the form, action 2 or 3.  DR-491, Notice of Denial of Application for Agricultural…Classification of Lands, will be used as the denial notice for Greenbelt renewals. 

What do you do now?  You must make an action decision no later than 30 days from the postmark date on the denial notice.  Some property appraisers mail out denial notices prior to July 1; i.e., your timeframe for action may be prior to the end of July or may have already expired.  If after receiving the denial notice, you are unable to convince the property appraiser your property is qualified for Greenbelt, and want to appeal the denial, you must file a petition to the Value Adjustment Board by the 30^th day following the postmark date.  The Value Adjustment Board will determine hearing dates later; and, you will be notified.  If you are unsure you want to appeal to the Board, you must file the petition in order to reserve your right to appeal.

You have several options for addressing the denial.

The property must be used primarily for commercial agricultural purposes to qualify for Greenbelt.  If the property is not qualified and no changes in current use are planned, you may simply accept the denial.

You may accept the denial for the current year and file again next year when your actions, activities, and use increase and the property will more likely comply with the requirements.  We can assist you with qualifying your property for Greenbelt classification.

You may appeal the denial to the Value Adjustment Board.  Contact us for assistance with your appeal.

For more information, contact us at http://www.teddergreenbeltconsulting.com

Follow-up to Constitutional Amendment 1 Provisions

 Amendment I Provisions and Questions

We received many questions related to “Amendment I” over the first half of the year and during an IFAS Stewardship videoconference in June.  In late January of this year, voters approved Constitutional Amendment I.  The required implementing legislation followed from the 2008 Legislature.  While none of the four provisions resulted in changes to Florida’s Agricultural Classification/Greenbelt law, some of the provisions, however, may directly or indirectly affect properties and agricultural businesses with Greenbelt.

Provisions for increase in the Homestead Exemption and portability of the Save-Our-Homes assessment limitation benefits may lower a county’s revenue base and potentially increase, in context, the ad valorem tax rate.  The exemption increase does not apply to school taxes.  For a Greenbelt property with Homestead Exemption, the portability applies only to the values of the portion receiving the assessment limitation benefits (house and yard).  Greenbelt benefits are not portable. 

Amendment I provides a Tangible Personal Property exemption of $25,000 for businesses, but is not applicable to homesteaded property or the homesteaded portion of a Greenbelt property. 

And finally, Amendment I provides a 10% cap or limit on annual assessment increases for non-homestead property, effective 2009, but does not apply to school millage levies. 

Does the cap provision include acreage under Greenbelt assessment?  No, Classified Use (Greenbelt) land is excluded from the cap provisions. 

If a property loses Greenbelt, what affect does the cap limit have on the resulting non-Greenbelt assessment?  Department of Revenue personnel advised all the follow up  Rules to the implementing legislation have not been prepared yet (May 30); however, in the year a property loses Greenbelt, it will likely be reappraised at the established current market value with no coverage by the 10% cap.   For example, if a property with a 2008 $200 per acre Greenbelt value and an $8,000 per acre market value loses Greenbelt for 2009, the taxable value will be the assessed market value, not $220 per acre.

For more information, contact us at http://www.teddergreenbeltconsulting.com

Georgia 2008 Statutory Changes and Proposed Constitutional Amendments

 

Georgia 2008 Statutory Changes and Proposed Constitutional Amendments

05/07/2008                   

For more information, contact us at http://www.teddergreenbeltconsulting.com

While the 2008 Florida Legislature amended its Greenbelt statute to prohibit local authorities from requiring a minimum acreage for Agricultural/Greenbelt assessment, the Georgia Legislature did the opposite.  OGC 48-5-7.4 (provides for the conservation current use assessment) was amended by an addition:  “…The governing authority of a county in which the property that otherwise meets the requirements for current use assessment is located may establish a minimum number of acres as a condition for qualifying for the current use assessment.  Such minimum shall be up to 25 acres and…”

Minimum acreage requirements over 10 acres could be an issue, especially if the minimum is inclusive of all uses and not specific for each use, such as Christmas trees, pecan orchards, nursery, and other uses which frequently are located on parcels under 25 acres.

The Legislature also provided two proposed constitutional amendments.  The Property Tax Reform Amendment will change Article VII, Section I and provide for a freeze on the established 2008 property values and a percentage cap limitation on the annual increase in assessments.  The amendment provides additional changes not specific to agricultural property 

The second amendment will change OGC 48-5-7 by adding a new section:  Georgia Forest Land Protection Act of 2008.  A new class of covenanted property will be established:  “Forest land conservation use property.”  The provisions of the new section are very similar to the provisions for conservation current use assessment.  Noted differences include the covenant period (15 years instead of 10), an acreage minimum of 200, and, no maximum acreage limitation.  Property in preferential agricultural assessment or conservation use current assessment, if qualified, can be converted to forest land conservation use assessment.

2008 Florida Greenbelt Legislation

 

2008 Florida Greenbelt Legislation

05/02/2008

For more information, contact us at http://www.teddergreenbeltconsulting.com

No significant proposals for changes to the Agricultural Classification/Greenbelt statute (FS 193.461) appeared through the entire Legislative session, until the middle of the last week.  A change was quietly and with little attention added to H909 and passed on the last day of the session.  For the most part, the bill covered other unrelated property tax issues.

In FS 193.461(3)(b)1, the word “utilized” was changed to “used,” and is of no apparent significance. 

In FS 193.461(3)(b)4, which covers criteria for qualification for Agricultural Classification, to “Size, as it relates to specific agricultural use,” the bill added “…but in no event shall a minimum acreage be required for agricultural assessment.”  Interpretation of this change may be interesting.  Size is still one of the criteria; so what is the effect of the change?  A minimum required acreage apparently cannot now be the sole criteria for rejection of the Greenbelt application.  Most of the County Property Appraisers have adopted local guidelines or standards for Greenbelt, including acreage minimums.  Many of these guidelines, and the Silvicultural Greenbelt Guidelines recently released by the Florida Forestry Association, also contain language providing for variance from the minimums.  Will the statutory change eliminate minimum acreages from the local guidelines?  Perhaps not, if the variance language is still included and the minimums are only “guidelines.” 

Although size is generally interpreted as acreage, the original statutory language says nothing about “acreage.”  The authors of the original language likely intended size to mean both size in acreage and size of the operation.  This was also my working interpretation of the size criteria during the 21 years I worked with the Florida Department of Revenue.  For example, a 400-acre parcel of range pasture would certainly present no issue with acreage size.  If the owner had only 2 cows on it, the County Property Appraiser would likely have an issue with size of the operation.  Although proposed in the early 1970s, the State never attempted development of guidelines for acreage minimums because the statute did not appear to provide the authority and the very large number of “specific” agricultural uses existing in Florida at the time. 

Florida Constitutional Amendments Proposals from the Taxation and Budget Reform Commission

Florida Constitutional Amendments Proposals from the Taxation and Budget Reform Commission

Plus Insights on proposals

04/28/2008

 

Two of the constitutional amendment proposals before the Taxation and Budget Reform Commission are of significant interest to agricultural property owners.  Proposals 0015 and 0016 were approved, were subsequently combined, and will appear on the November ballot.  The combined proposal addresses classification, appraisal, and property tax of properties used for conservation purposes.

In short, the proposal amends Sections 3 and 4 of Article VII and creates Section 28 of Article XII  of the Florida Constitution.  The Commission’s Resolution, changes, schedule, and ballot language current 04/24/2008, although appearing redundant, are provided verbatim below.  Both amendments are additions, rather than changes to previous language.

“Resolution of the Taxation and Budget Reform Commission:  A resolution proposing an amendment to Sections 3 and 4 of Article VII and the creation of Section 28 of Article XII of the State Constitution to require the Legislature to provide by law for an ad valorem tax exemption for real property dedicated in perpetuity for conservation purposes, to require land used for conservation purposes to be classified and assessed solely on the basis of character or use for the purposes of ad valorem taxation, and to provide implementation and effective dates.”

“Be It Resolved by the Taxation and Budget Reform Commission:  That the following amendment to Sections 3 and 4 of Article VII and the creation of Section 28 of Article XII of the State Constitution are agreed to and shall be submitted to the electors of this state for approval or rejection at the next general election or at an earlier special election specifically authorized by law for that purpose:”

Article VII, Section 3 (g) “There shall be granted an ad valorem tax exemption for real property dedicated in perpetuity for conservation purposes, including real property encumbered by perpetual conservation easements or by other perpetual conservation protections, as defined by general law.”

Article VII, Section 4  (b) “As provided by general law and subject to conditions, limitations, and reasonable definitions specified therein, land used for conservation purposes shall be classified by general law and assessed solely on the basis of character or use.”

Article XII, Schedule, Section 28. “ Property tax exemption and classification and assessment of land used for conservation purposes.  The amendment to Section 3 of Article VII requiring the creation of an ad valorem tax exemption for real property dedicated in perpetuity for conservation purposes, and the amendment to Section 4 of Article VII requiring land used for conservation purposes to be classified by general law and assessed solely on the basis of character or use for purposes of ad valorem taxation, shall take effect upon approval by the electors and shall be implemented by January 1, 2010.  This section shall take effect upon approval of the electors.”

The ballot statement, or ballot language:

“PROPERTY TAX EXEMPTION OF PERPETUALLY CONSERVED LAND; CLASSIFICATION AND ASSESSMENT OF LAND USED FOR CONSERVATION.—Requires Legislature to provide a property tax exemption for real property encumbered by perpetual conservation easements or other perpetual conservation protections, defined by general law.  Requires Legislature to provide for classification and assessment of land used for conservation purposes, and not perpetually encumbered, solely on the basis of character or use.  Subjects assessment benefit to conditions, limitations, and reasonable definitions established by general law.  Applies to property taxes beginning in 2010.”

Comment, Opinion, and Insight: 

This constitutional proposal will likely be approved by voters, since it is an environmental issue, already has wide support, and likely will have little or no opposition.  If approved by voters, the Legislature is required to provide implementing legislation.  Implementing legislation is followed by Rules, guidelines, forms, procedures, etc. promulgated by or through the Department of Revenue. 

The tax exemption for perpetually encumbered properties appears to be intended as a complete tax exemption, not a partial tax exemption or partial assessment.  Although such an exemption will lower the local county tax bases, many properties of interest for conservation purposes are already used for agricultural purposes and have a reduced property tax liability as a result of the Agricultural Classification (Greenbelt).  Additionally, the State and counties will likely save money from the reduction of properties purchased for conservation purposes.  Considerable technical details involving applications, requirements, definitions, etc will need to be solved.  “Conservation easements” are already defined in Florida law (704.06) as “perpetual.”

The classification and assessment of properties used for conservation purposes, not in perpetuity, will be a new Classified Use, similar to other Classified Uses, such as the Agricultural Classification (Greenbelt).  Implementing legislation will likely require an  application form, definitions, limitations, qualifications, encumbrance period, and appraisal rules, guidelines, and procedures.  One very significant question will be:  “Will Conservation Classified Use properties be appraised the same way as Agricultural Classified Use?”  Some statements at the TBRC meetings indicated the appraisal values would be the same.  That is, of course, yet to be determined.  Classified Agricultural property is appraised by the income approach; and, the property is statutorily required to be primarily in a commercial agricultural use.  A Conservation Use classification could pick up those properties which are not in a commercial agricultural use and do not qualify for an Agricultural Classification.  If the property is not in commercial agricultural use, however, the appraisal could not properly and technically be based on the income approach; and, a different approach would be required.  Additionally, a Conservation Use classification with the same values as Agricultural Use Classification would appear to discourage commercial agricultural use, if the same taxable values could be attained without the investment and risk taken by farmers, ranchers, and timberland owners, and perhaps, consequently, harm the Florida agricultural economy.

FS 193.501, “Assessment of lands subject to a conservation easement…,” currently provides for current use assessment of lands encumbered for not less than 10 years, and for market value assessment for lands encumbered for less than 10 years.  This statute will likely be amended and/or extended to implement the constitutional change.

 

For more information, contact us at http://www.teddergreenbeltconsulting.com

Greenbelt Classification Filing Period

Greenbelt Agricultural Classification filing period:   January 1 – March 1

If you are the owner of Agricultural Property which did not receive a Greenbelt Agricultural Classification under your ownership in 2007,  and you wish to apply for this Classification for the privileged lower property tax assessment in 2008, you must file an application between January 1 and March 1 with the Property Appraiser in the county where the property is located.  The form number is DR-482,  Application and Return for Agricultural Classification of Lands, and is available from the County Property Appraiser.

If you already receive a Greenbelt Agricultural Classification on your property and wish to continue the Classification in 2008, you will receive one of two forms from the County Property Appraiser.  If the County requires annual renewal of the Classification, you will receive a green card, DR-499, Agricultural Classification of Lands Renewal.  You must sign and return the DR-499 card between January 1 and March 1.  If your County does not require an annual renewal of the Classification, you will receive a different green card, DR-499AR, Removal of Agricultural Classification.  Regardless of the form name, this is your automatic renewal card; you do nothing with it unless your property is no longer qualified for the Classification.

Don’t make these common mistakes:  they could cost you plenty! 

If you are under the impression, or were told, a Greenbelt Agricultural Classification held by the previous owner transfers with an exchange of ownership, it does not!  You must file a new application.

The absolute filing deadline is March 1.  The law does allow for extenuating circumstances; however, failure to timely apply, not knowing to apply, and lost in the mail are usually not acceptable as extenuating circumstances. 

Get a receipt copy (stamped received) of your DR-482 application.  Get a receipt for the DR-499 card; it is another green card:  DR-499R. 

A Greenbelt Agricultural Classification is an extremely valuable document to place in the mail:  File the DR-482 and 499 in person, if possible, or, at least make sure you receive a receipt from the Property Appraiser prior to the filing deadline. 

Do not sign and return the DR-499AR card unless your property is no longer qualified for the Greenbelt Agricultural Classification.  You will be removing the Classification if you sign and return the card.

Don’t Make These Mistakes–They Could Cost You Plenty

Greenbelt Agricultural Classification filing period:   January 1 – March 1

If you are the owner of Agricultural Property which did not receive a Greenbelt Agricultural Classification under your ownership in 2007,  and you wish to apply for this Classification for the privileged lower property tax assessment in 2008, you must file an application between January 1 and March 1 with the Property Appraiser in the county where the property is located.  The form number is DR-482,  Application and Return for Agricultural Classification of Lands, and is available from the County Property Appraiser.

If you already receive a Greenbelt Agricultural Classification on your property and wish to continue the Classification in 2008, you will receive one of two forms from the County Property Appraiser.  If the County requires annual renewal of the Classification, you will receive a green card, DR-499, Agricultural Classification of Lands Renewal.  You must sign and return the DR-499 card between January 1 and March 1.  If your County does not require an annual renewal of the Classification, you will receive a different green card, DR-499AR, Removal of Agricultural Classification.  Regardless of the form name, this is your automatic renewal card; you do nothing with it unless your property is no longer qualified for the Classification.

Don’t make these common mistakes:  they could cost you plenty! 

If you are under the impression, or were told, a Greenbelt Agricultural Classification held by the previous owner transfers with an exchange of ownership, it does not!  You must file a new application.

The absolute filing deadline is March 1.  The law does allow for extenuating circumstances; however, failure to timely apply, not knowing to apply, and lost in the mail are usually not acceptable as extenuating circumstances. 

Get a receipt copy (stamped received) of your DR-482 application.  Get a receipt for the DR-499 card; it is another green card:  DR-499R. 

A Greenbelt Agricultural Classification is an extremely valuable document to place in the mail:  File the DR-482 and 499 in person, if possible, or, at least make sure you receive a receipt from the Property Appraiser prior to the filing deadline. 

Do not sign and return the DR-499AR card unless your property is no longer qualified for the Greenbelt Agricultural Classification.  You will be removing the Classification if you sign and return the card.