beyond a reasonable doubt

Posts tagged ‘Law’

Legitimate Tax Reform or Another Attack on Agriculture?

Several months ago while attending a Land Stewardship Class, sponsored by the Community Agriculture Alliance, I was surprised to learn from our County Assessor that some of the rules for the taxing of agricultural lands had recently been changed.  The legislature had passed House Bill 11-1146 and the Governor had signed it for the ostensible purpose of curbing an abuse of the constitutional tax benefits that apply to agricultural land in Colorado.

The change seems to have occurred because from the perspective of the front-range legislators, people who own nice houses in mountain resort areas were getting an undeserved tax benefit if they leased their land to a cattle rancher or a hay farmer.  In this type of circumstance, the property owner (with an agricultural tax classification) would pay a low rate on a low valuation, as prescribed by the Colorado Constitution.  The owner of a nice house on 40 acres of land that was grazed by a neighbor’s cattle might pay a tax of a few hundred dollars per year, rather than a tax of a few thousand dollars per year (without the agricultural activity).

The new law does not impact vacant agricultural land.  However, where there is a residence, the law requires that the residential area – up to two acres — of an agricultural property shall not be included in the definition of “agricultural land” unless the improvement is integral to an agricultural operation conducted on such land.   If the residential area is not “integral,” then the area must be taxed at the residential rate, but at a value that in most cases will be significantly higher.  The taxes for this property will go up.

The statute goes on to define what it means by the phrase “integral to an agricultural operation.” To try to phrase this in plain English, someone who lives in the house has to be running the agricultural operation on the land, or someone living in the house must be a close relative of the person who is running the agricultural operation.

In Routt County and neighboring counties, there has frequently been a mutually supportive relationship between local agriculture operators and the second-home owners who have purchased some acreage.  Sometimes it is simply a grazing lease for the open land, other times it can be a caretaker relationship, or a more complex relationship where one property owner shares responsibilities with another.  The bottom line has been one that has kept lands in active agricultural use, and the agricultural tax classification has been part of the incentive that has helped this cooperation work.

So, what will the net impact be here in Routt County?  Will this new  law discourage people from having sheep and cattle graze across their property.  Will we lose additional acreage from ranchland?  While we may strongly suspect this negative impact to available productive agricultural land, there is no way that we will know for at least several years – as the County Assessor pores over the recent agricultural property survey results, makes initial determinations, notifies the property owners, and the property owners decide how they will respond to the situation.

For now, what we do know is that under the new law the County Assessor must make an initial determination of which agricultural properties should be subjected to some change by the first of May.  Then, the owners who receive notice of classification and/or valuation changes will have an opportunity to protest before June first – initially to the County Assessor, and then possibly to the Board of County Commissioners, sitting at the Board of Equalization.  When property owners see their tax bills in January or February of 2013, they will know what the real impact of this legislation is on them and their property.

The County Assessor and the County Commissioners have provided some basic fact background concerning this law on the County’s web site.   The upper right corner of the Routt County home page identifies House Bill 11-1146, and will connect you to the statute and related background.

(Rich Tremaine is an attorney in Steamboat Springs and a member of the Community Agriculture Alliance’s advisory board.  A copy of this column and further information on this topic can be found at his law firm’s blog “ktlawsteamboat.wordpress.com”)

Originally published in the Steamboat Today on January 13, 2013 and can be found here.

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to TwitterAdd to TechnoratiAdd to Yahoo BuzzAdd to Newsvine

ROUTT COUNTY ASSESSOR TO IMPLEMENT NEW PROPERTY TAX RULES FOR AGRICULTURAL LANDS

In 2011, the Colorado Legislature amended the real estate tax laws in an effort to curtail what it perceives to be an abuse of agricultural tax benefits. The concept appears to be that if someone has a house on their property, but is not pursuing an agricultural activity, then that house is really “residential” even though the rest of the acreage may be in an agricultural use. The residential area should then be categorized as “residential” and taxed based on the residential value, rather than on the lower agricultural value.

Specifically, the Legislature approved House Bill 11-1146, amending the definition of “Agricultural land” to exclude up to “two acres … of land on which a residential improvement is located unless the improvement is integral to an agricultural operation conducted on such land.” This new law will now be implemented by the County Assessors around the State of Colorado.

After a recent public presentation – the County Assessor providing a report and update to the Routt County Commissioners, the County has posted some basic information about the new law, and the law itself, on the County’s web site:  http://www.co.routt.co.us/commissioners/Assessor/House%20Bill%2011-1146_CountyWebPage.pdf

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to TwitterAdd to TechnoratiAdd to Yahoo BuzzAdd to Newsvine

Community Agriculture Alliance: Farm Property Tax Laws Revisited


The Colorado Court of Ap­­­peals recently considered the question: When is the owner of agricultural property eligible to receive the favorable “agricultural” tax classification? Fortunately for the landowner involved and for the owners of agricultural property in this region, the court took a common-sense approach to applying the facts of the case to the Colorado real estate tax law.

Under Colorado law, a property that is used for agricultural purposes, where the owner is attempting to make a profit — either from crops or from livestock uses — is entitled to an “agricultural” tax classification. This then results in a favorable tax rate. In this case, the Adams County assessor had classified the subject property as “vacant,” which resulted in a much higher tax rate to the owner, Aberdeen Investors Inc.

Aberdeen had purchased the property in 2004 and in July 2005 leased the property out for grazing for the remainder of the grazing season. Aberdeen also leased the property for grazing in 2006 and in 2007 requested that the property be classified as “agricultural.” The assessor denied the request, indicating that the property would have had to be in agricultural use on Jan. 1, 2005, in order to satisfy the requirement that the property be in agricultural use for the previous two years.

Although the court’s decision bogs down a bit in some technical legal interpretation, it did apply common sense in stating, “using a property as a farm or ranch seldom occurs on January 1.” Of course, this is not because farmers and ranchers party so hard on New Year’s Eve, it is because this time of winter is not growing season or grazing season in most of Colorado.

In summary, the court considered some of the basic realities of agriculture in our climate — the seasonal aspect of much of the activity, the fact that a portion of the property may lie fallow for a time to replenish the soil, and the fact that areas may be excluded from grazing or tilling for conservation reasons. The court indicated that the legal interpretation of this property tax law is to be reasonably applied to the realities of agricultural operations. If the Colorado Legislature wants the rules to be interpreted differently, then the Legislature can amend the law.

This type of practical opinion is important to this area of Colorado, where our growing and grazing seasons are much more abbreviated than much of the state. It also is important that the court recognizes that conservation practices might dictate that portions of the agricultural property are not used for specific agricultural purposes in a given year.

As a final aside, consider whether the county assessor might have viewed the situation differently — before he classified this property as “vacant” land in 2007 — if the owner had been the Aberdeen Ranch Inc., rather than the Aberdeen Investors Inc.

The citation to this case is Aberdeen Investors, Inc., v. Adams County Board of County Commissioners, 240 P.3d 398 (Colo.App. 2009)

Originally published in The Steamboat Pilot & Today

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to TwitterAdd to TechnoratiAdd to Yahoo BuzzAdd to Newsvine

Tag Cloud