Green Acres - Mille Lacs County Assessor's Office

Green Acres
Mille Lacs County Assessor's Office

What is "Green Acres?" Why do some counties administer the "Green Acres" program? Who qualifies for the "Green Acres" program? How will "Green Acres" benefit an agricultural property owner? How does the "Green Acres" program work? What is the "agricultural value" of a property? Can special local assessments be deferred under the program? If a property no longer qualifies for "Green Acres," how many years can the County Auditor/Treasurer go back to collect additional taxes on the deferment? What if a property loses its eligibility prior to the expiration of the 3-year period? If a property has deferred special local assessments and loses its “Green Acres” eligibility, when does the deferment become due? Are deferred taxes and special assessments considered a lien on the property? What if only part of the property is sold or ceases to be used for agricultural purposes? Does the tax deferment continue if the property is sold and used for agricultural purposes? What if the property no longer qualifies for “Green Acres” because it loses its agricultural classification? How do I qualify? How do I apply?
*What is “Green Acres”?* Minnesota law requires assessors to value property at its estimated market value. Estimated market value must reflect the use of the property that will bring the greatest economic return to the land (it’s “highest and best use”). For many farm properties, the highest and best use may be to develop the land for a residential or commercial use. The residential or commercial value of a property is typically significantly higher than that of farmland. In the 1960’s, the Legislature recognized that urban sprawl was causing valuation and tax increases that had the potential of forcing farmers off their land in certain situations. The Legislature developed a mechanism that allowed qualifying farmers to pay real estate based upon the agricultural value of their land while deferring the higher property taxes attributed to the land’s value as residential or commercial property. This law, officially known as the Agricultural Property Tax law, is commonly referred to as Green Acres and is codified in MS section 273.111. In 2008, the Legislature amended the law to clarify that, going forward, only class 2a productive agricultural land can qualify for Green Acres. Class 2b rural vacant land that is currently enrolled in Green Acres may be grandfathered into the program until the 2013 assessment. Beginning with the 2013 assessment, any class 2b rural vacant land that has been “grandfathered” into Green Acres will be removed from the program and deferred taxes will be collected. *Why do some counties administer the “Green Acres” program?* The implementation of a “Green Acres” program and its use are based upon the discretion of each county according to its location, land characteristics and prevailing market conditions. It is administered for many reasons, one of which is to help curtail the loss of farmland due to urban growth. *Who qualifies for the “Green Acres” program?* Owners who possess agricultural property that is devoted to the “production for sale of agricultural products,” may qualify. The property must: be classified as 2a productive agricultural land and be primarily devoted to agricultural use; be at least 10 acres in size or a nursery or greenhouse; and Either be the homestead of the owner; or the owner’s surviving spouse, child, or sibling or be farmed in conjunction with the homestead property; or have been in the possession of the applicant, the applicant’s spouse, parent, or sibling for a period of at least seven years prior to application or be farmed in conjunction with property within four townships or cities from property that has been in possession of the owner, the owner’s spouse, parent or sibling for a period of at least seven years prior to application; or be in the possession of a nursery or greenhouse or an entity owned by a proprietor, partnership, or corporation which also owns the nursery or greenhouse operations on the parcel or parcels; or be the homestead of a shareholder in a family farm corporation or authorized farm entity under MS 500.24; or be the homestead of a member/shareholder of a poultry entity other than a limited liability entity in which the majority of the members, partners or shareholders are related and at least one of the members, partners or shareholders either resides on the land or actively farms the land; or be the homestead of an individual who is part of a corporation that derives 80% or more of it’s gross receipts from the wholesale or retail sale of horticulture or nursery stock. All parcels being enrolled for the deferred tax must be under the same ownership. *How will “Green Acres” benefit an agricultural property owner?* It may or may not. It depends on the property owners plans. If the property owner plans to farm the property for an extended period of time, it may be advantageous to enroll in this tax deferment program. If he/she has plans to sell, develop or put part or all of the property into a non- agricultural use within a reasonably short period of time, it may not be practical to enroll in the program. The option to sign up for the program should be carefully reviewed by the property owner. The financial incentive, if any, to enroll in “Green Acres” will presumably be higher for those properties that are in the path of development. As the demand for these properties increase, it is expected that the prices paid and the market values reported will rise at a faster rate than the general market increases evident in the agricultural market place. The greater the difference between a qualifying properties market value and agricultural value, the higher the associated property tax benefit. *How does the “Green Acres” program work?* For properties enrolled in Green Acres, taxes are calculated on both the estimated market value (higher value based on highest and best use) and the agricultural value (lower value). The difference between the tax calculated on the agricultural market value and the estimated market value is deferred until the property is sold or no longer qualifies for the Green Acres program. When property is sold, transferred, or no longer qualifies, the deferred tax (the difference between the agricultural tax and the tax based on the highest and best use) for the current tax payable year and the two prior years must be paid to the county. *What is the "agricultural value" of a property?* Simply stated, the agricultural value of a property is its value when used for agricultural purposes. Unfortunately, it is nearly impossible to find sales of agricultural property that are not affected by the non-agricultural factors such as development pressure or sales of recreational land. In an effort to develop statewide uniformity, the Legislature directed the Commissioner of Revenue to develop a fair method for determining the agricultural values of each county. The Department of Revenue studied statewide sales of largely tillable agricultural property across the state for 1990-1996. The department found that sales in several southwestern Minnesota counties were affected the least by non-agricultural factors, and thus as close as possible to “true” agricultural sales. They are known as the “base counties.” Sales in the other 82 state counties during the same period were then compared to those in the base counties. This comparison yielded a set of individual county factors that measure the percentage relationship between each county and the base counties. Each year, Revenue reviews current sales and calculates a base value that is used to determine agricultural values for all properties enrolled in the Green Acre program. The base value is adjusted for each county to determine the average tillable value per acre for that county. The county assessor then applies this average value to individual properties. The value may differ on each individual parcel due to quality of land, location, or other factors. *Can special local assessments be deferred under the program?* Yes, the payment of special local assessments for improvements made to property qualifying for the “Green Acre” program can also be deferred. However, when the property sells, all deferred special assessments become due. *If a property no longer qualifies for “Green Acres,” how many years can the County Auditor/Treasurer go back to collect additional taxes on the deferment?* The maximum number of years that the County Auditor/Treasurer can impose additional taxes on a property that had qualified for a tax deferment is 3 years. No payment is required for previously deferred taxes that extend beyond the most recent three year period. *What if a property loses its eligibility prior to the expiration of the 3-year period?* Land that no longer qualifies for a tax deferment prior to the expiration of the 3-year period is subject to additional taxes only in the amount equal to the taxes that were deferred. *If a property has deferred special local assessments and loses its “Green Acres” eligibility, when does the deferment become due?* When the property no longer qualifies for the “Green Acres” program, all deferred special local assessments plus interest become payable in equal installments spread over the time remaining until the last maturity date of the bonds issued to finance the improvements for which the assessments are levied. If the bonds have matured, the deferred special local assessments plus interest are payable within ninety (90) days. *Are deferred taxes and special assessments considered a lien on the property?* Yes, the additional taxes imposed and the deferred special local assessments are a lien upon the property assessed. It is a tax lien to the same extent and duration as the regular payable real estate taxes levied against the property. *What if only part of the property is sold or ceases to be used for agricultural purposes?* Only that part of the property that has been sold for a use other than farming or has been put to a non-agricultural use shall be subject to additional taxes. *Does the tax deferment continue if the property is sold and used for agricultural purposes?* When property qualifying for the “Green Acres” program is sold, no additional taxes will be extended against it provided the property continues to be classified agricultural by the assessor for property tax purposes and meets the requirements for the tax deferral. However, the new owner must file an application for the continued deferment within 30 days after the sale. The purchaser then assumes any deferred tax that goes with the property. *What if the property no longer qualifies for “Green Acres” because it loses its agricultural classification?* If the property is not sold within 3 years of losing the agricultural classification for property tax purposes, no deferred taxes will be due on the property. *How do I qualify?* Beginning with the 2009 assessment for taxes payable in 2010, only property that is classified by the assessor as class 2a productive agricultural land is eligible for enrollment in the Green Acres program. The property must: be at least 10 acres in size or a nursery or greenhouse; and be primarily devoted to the production for sale of agricultural products. If you have class 2b rural vacant land as a part of your farm homestead, it will not qualify for Green Acres tax deferral. However, it may be eligible to receive other benefits under the Rural Preserve property tax program. Only lands engaged in the production of an agricultural product for sale will qualify for Green Acres. A description of “agricultural production” can be found in MS, section 273.13, subd. 23. Your assessor will be able to assist you in determining which portions of your farm are considered “agriculturally productive” and which are considered “rural vacant land.” Green Acre enrollment is limited to properties owned by individuals and certain farm family entities. What if I own 2b rural vacant land that is currently enrolled in Green Acres? There are several options available. Each has benefits and consequences for you to consider. Option 1 - You may withdraw some or all of your 2b rural vacant land before May 1, 2010, without any payback of deferred taxes. Your property will be assessed at it’s estimated market value for the 2010 assessment for taxes payable in 2011. Option 2 - You may leave some or all of your class 2b rural vacant land enrolled in Green Acres until 2013. Before or at that time, you may enroll the land in the new Rural Preserve Program without any payback of deferred taxes. Option 3 – You may leave some or all of youor class 2b land in Green Acres. Beginning with the 2013 assessment, the assessor will remove all class 2b land from Green Acres and collect three years deferred taxes. The land will be valued at it’s market value for the 2013 assessment and beyond. In addition to these options, class 2b rural vacant land may be eligible for: the reduced classification rate provided by the 2c Managed Forest Land classification; or for the incentive payment provided by the Sustainable Forest Incentive Act (SFIA) program. For additional information on class 2c, please see your county assessor. Information on the SFIA program may be obtained from the Department of Revenue’s website, www.taxes.state.mn.us *How do I apply?* Green Acres applications are made to and approved by the County Assessor. Proper documentation to verify agricultural income must be submitted with the application. Application forms are available at the County Assessor’s Office or by clicking on 'Forms' on the Assessor's Office webpage. The application must be filed by May 1st in order to receive consideration for the next taxes-payable year. Your assessor may also require: an agricultural use verification form; proof by affidavit or otherwise that the property meets all requirements for qualification; and a copy of the appropriate schedule or form showing farm income has been included in the most recently filed federal income tax return of the applicant. What else should I know about Green Acres? If a property enrolled in Green Acres is sold to another person who may qualify for continuation of the program, the new owner must apply to the County Assessor within 30 days of the purchase. If at any time you sell, transfer, subdivide or otherwise withdraw your property (in part or in whole) from the Green Acres program, you will be responsible to pay back deferred taxes on the acreage withdrawn for the current year plus the two prior years. Once an entire parcel is withdrawn from Green Acres, you will be responsible to pay any deferred special assessments plus any interest accrued. For further assistance, please contact the Assessor’s Office at 635 2nd St SE, Milaca, MN, 56353 or call (320) 983-8311 or (888) 280-8311.

What is “Green Acres”?

Minnesota law requires assessors to value property at its estimated market value. Estimated market value must reflect the use of the property that will bring the greatest economic return to the land (it’s “highest and best use”). For many farm properties, the highest and best use may be to develop the land for a residential or commercial use. The residential or commercial value of a property is typically significantly higher than that of farmland.

In the 1960’s, the Legislature recognized that urban sprawl was causing valuation and tax increases that had the potential of forcing farmers off their land in certain situations. The Legislature developed a mechanism that allowed qualifying farmers to pay real estate based upon the agricultural value of their land while deferring the higher property taxes attributed to the land’s value as residential or commercial property. This law, officially known as the Agricultural Property Tax law, is commonly referred to as Green Acres and is codified in MS section 273.111.

In 2008, the Legislature amended the law to clarify that, going forward, only class 2a productive agricultural land can qualify for Green Acres. Class 2b rural vacant land that is currently enrolled in Green Acres may be grandfathered into the program until the 2013 assessment. Beginning with the 2013 assessment, any class 2b rural vacant land that has been “grandfathered” into Green Acres will be removed from the program and deferred taxes will be collected.

Why do some counties administer the “Green Acres” program?

The implementation of a “Green Acres” program and its use are based upon the discretion of each county according to its location, land characteristics and prevailing market conditions. It is administered for many reasons, one of which is to help curtail the loss of farmland due to urban growth.

Who qualifies for the “Green Acres” program?

Owners who possess agricultural property that is devoted to the “production for sale of agricultural products,” may qualify.

The property must:

be classified as 2a productive agricultural land and be primarily devoted to agricultural use;

be at least 10 acres in size or a nursery or greenhouse; and

Either

be the homestead of the owner; or the owner’s surviving spouse, child, or sibling or be farmed in conjunction with the homestead property; or

have been in the possession of the applicant, the applicant’s spouse, parent, or sibling for a period of at least seven years prior to application or be farmed in conjunction with property within four townships or cities from property that has been in possession of the owner, the owner’s spouse, parent or sibling for a period of at least seven years prior to application; or

be in the possession of a nursery or greenhouse or an entity owned by a proprietor, partnership, or corporation which also owns the nursery or greenhouse operations on the parcel or parcels; or

be the homestead of a shareholder in a family farm corporation or authorized farm entity under MS 500.24; or

be the homestead of a member/shareholder of a poultry entity other than a limited liability entity in which the majority of the members, partners or shareholders are related and at least one of the members, partners or shareholders either resides on the land or actively farms the land; or

be the homestead of an individual who is part of a corporation that derives 80% or more of it’s gross receipts from the wholesale or retail sale of horticulture or nursery stock.

All parcels being enrolled for the deferred tax must be under the same ownership.

How will “Green Acres” benefit an agricultural property owner?

It may or may not. It depends on the property owners plans. If the property owner plans to farm the property for an extended period of time, it may be advantageous to enroll in this tax deferment program. If he/she has plans to sell, develop or put part or all of the property into a non- agricultural use within a reasonably short period of time, it may not be practical to enroll in the program. The option to sign up for the program should be carefully reviewed by the property owner.

The financial incentive, if any, to enroll in “Green Acres” will presumably be higher for those properties that are in the path of development. As the demand for these properties increase, it is expected that the prices paid and the market values reported will rise at a faster rate than the general market increases evident in the agricultural market place. The greater the difference between a qualifying properties market value and agricultural value, the higher the associated property tax benefit.

How does the “Green Acres” program work?

For properties enrolled in Green Acres, taxes are calculated on both the estimated market value (higher value based on highest and best use) and the agricultural value (lower value).

The difference between the tax calculated on the agricultural market value and the estimated market value is deferred until the property is sold or no longer qualifies for the Green Acres program.

When property is sold, transferred, or no longer qualifies, the deferred tax (the difference between the agricultural tax and the tax based on the highest and best use) for the current tax payable year and the two prior years must be paid to the county.

What is the "agricultural value" of a property?

Simply stated, the agricultural value of a property is its value when used for agricultural purposes. Unfortunately, it is nearly impossible to find sales of agricultural property that are not affected by the non-agricultural factors such as development pressure or sales of recreational land. In an effort to develop statewide uniformity, the Legislature directed the Commissioner of Revenue to develop a fair method for determining the agricultural values of each county.

The Department of Revenue studied statewide sales of largely tillable agricultural property across the state for 1990-1996. The department found that sales in several southwestern Minnesota counties were affected the least by non-agricultural factors, and thus as close as possible to “true” agricultural sales. They are known as the “base counties.”    Sales in the other 82 state counties during the same period were then compared to those in the base counties. This comparison yielded a set of individual county factors that measure the percentage relationship between each county and the base counties.

Each year, Revenue reviews current sales and calculates a base value that is used to determine agricultural values for all properties enrolled in the Green Acre program. The base value is adjusted for each county to determine the average tillable value per acre for that county. The county assessor then applies this average value to individual properties. The value may differ on each individual parcel due to quality of land, location, or other factors.

Can special local assessments be deferred under the program?

Yes, the payment of special local assessments for improvements made to property qualifying for the “Green Acre” program can also be deferred. However, when the property sells, all deferred special assessments become due.

If a property no longer qualifies for “Green Acres,” how many years can the County Auditor/Treasurer go back to collect additional taxes on the deferment?

The maximum number of years that the County Auditor/Treasurer can impose additional taxes on a property that had qualified for a tax deferment is 3 years. No payment is required for previously deferred taxes that extend beyond the most recent three year period.

What if a property loses its eligibility prior to the expiration of the 3-year period?

Land that no longer qualifies for a tax deferment prior to the expiration of the 3-year period is subject to additional taxes only in the amount equal to the taxes that were deferred.

If a property has deferred special local assessments and loses its “Green Acres” eligibility, when does the deferment become due?

When the property no longer qualifies for the “Green Acres” program, all deferred special local assessments plus interest become payable in equal installments spread over the time remaining until the last maturity date of the bonds issued to finance the improvements for which the assessments are levied. If the bonds have matured, the deferred special local assessments plus interest are payable within ninety (90) days.

Are deferred taxes and special assessments considered a lien on the property?

Yes, the additional taxes imposed and the deferred special local assessments are a lien upon the property assessed. It is a tax lien to the same extent and duration as the regular payable real estate taxes levied against the property.

What if only part of the property is sold or ceases to be used for agricultural purposes?

Only that part of the property that has been sold for a use other than farming or has been put to a non-agricultural use shall be subject to additional taxes.

Does the tax deferment continue if the property is sold and used for agricultural purposes?

When property qualifying for the “Green Acres” program is sold, no additional taxes will be extended against it provided the property continues to be classified agricultural by the assessor for property tax purposes and meets the requirements for the tax deferral. However, the new owner must file an application for the continued deferment within 30 days after the sale. The purchaser then assumes any deferred tax that goes with the property.

What if the property no longer qualifies for “Green Acres” because it loses its agricultural classification?

If the property is not sold within 3 years of losing the agricultural classification for property tax purposes, no deferred taxes will be due on the property.

How do I qualify?

Beginning with the 2009 assessment for taxes payable in 2010, only property that is classified by the assessor as class 2a productive agricultural land is eligible for enrollment in the Green Acres program. The property must:

be at least 10 acres in size or a nursery or greenhouse; and

be primarily devoted to the production for sale of agricultural products.


If you have class 2b rural vacant land as a part of your farm homestead, it will not qualify for Green Acres tax deferral. However, it may be eligible to receive other benefits under the Rural Preserve property tax program. Only lands engaged in the production of an agricultural product for sale will qualify for Green Acres. A description of “agricultural production” can be found in MS, section 273.13, subd. 23. Your assessor will be able to assist you in determining which portions of your farm are considered “agriculturally productive” and which are considered “rural vacant land.” Green Acre enrollment is limited to properties owned by individuals and certain farm family entities.

What if I own 2b rural vacant land that is currently enrolled in Green Acres?

There are several options available. Each has benefits and consequences for you to consider.

Option 1 - You may withdraw some or all of your 2b rural vacant land before May 1, 2010, without any payback of deferred taxes. Your property will be assessed at it’s estimated market value for the 2010 assessment for taxes payable in 2011.

Option 2 - You may leave some or all of your class 2b rural vacant land enrolled in Green Acres until 2013. Before or at that time, you may enroll the land in the new Rural Preserve Program without any payback of deferred taxes.

Option 3 – You may leave some or all of youor class 2b land in Green Acres. Beginning with the 2013 assessment, the assessor will remove all class 2b land from Green Acres and collect three years deferred taxes. The land will be valued at it’s market value for the 2013 assessment and beyond.

In addition to these options, class 2b rural vacant land may be eligible for: the reduced classification rate provided by the 2c Managed Forest Land classification; or for the incentive payment provided by the Sustainable Forest Incentive Act (SFIA) program. For additional information on class 2c, please see your county assessor. Information on the SFIA program may be obtained from the Department of Revenue’s website, www.taxes.state.mn.us

How do I apply?

Green Acres applications are made to and approved by the County Assessor. Proper documentation to verify agricultural income must be submitted with the application.

Application forms are available at the County Assessor’s Office or by clicking on 'Forms' on the Assessor's Office webpage. The application must be filed by May 1st in order to receive consideration for the next taxes-payable year.

Your assessor may also require:

an agricultural use verification form;

proof by affidavit or otherwise that the property meets all requirements for qualification; and

a copy of the appropriate schedule or form showing farm income has been included in the most recently filed federal income tax return of the applicant.

What else should I know about Green Acres?

If a property enrolled in Green Acres is sold to another person who may qualify for continuation of the program, the new owner must apply to the County Assessor within 30 days of the purchase.

If at any time you sell, transfer, subdivide or otherwise withdraw your property (in part or in whole) from the Green Acres program, you will be responsible to pay back deferred taxes on the acreage withdrawn for the current year plus the two prior years. Once an entire parcel is withdrawn from Green Acres, you will be responsible to pay any deferred special assessments plus any interest accrued.

For further assistance, please contact the Assessor’s Office at 635 2nd St SE, Milaca, MN, 56353 or call (320) 983-8311 or (888) 280-8311.