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Minnesota s Sustainable Forest Incentives Act SFIA

Presentation Overview. History of Property Tax Policy to Influence Forest Management and Use in MinnesotaMN Sustainable Forest Incentive Act (SFIA)Program descriptionLandowner perceptions/concerns/interestOpportunities for increasing program participation SFIA and Conservation Easements. Own

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Minnesota s Sustainable Forest Incentives Act SFIA

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    1. Minnesota’s Sustainable Forest Incentives Act (SFIA) June 13, 2007 Michael Kilgore Associate Professor Department of Forest Resources University of Minnesota St. Paul, MN

    2. Presentation Overview History of Property Tax Policy to Influence Forest Management and Use in Minnesota MN Sustainable Forest Incentive Act (SFIA) Program description Landowner perceptions/concerns/interest Opportunities for increasing program participation SFIA and Conservation Easements

    3. Ownership of MN’s Forests

    4. Family Forests: Economic Importance

    5. MN Forest Property Tax Laws -- Prior to SFIA -- Tree Growth Tax Law Tax based on 30% of annual tree growth value Eligibility Requirements Application to county required Landowners allow public access Problems: Inconsistent eligibility criteria among counties Low enrollment (< 500,000 acres) Rising tax rates (taxes tied to timber prices)

    6. MN Forest Property Tax Laws -- Prior to SFIA -- Auxiliary Forest Tax Law (AFTL) Minimal annual land tax ($0.1/ac) Yield tax: 10% – 40% of timber value Landowners allow public access 50 year contracts Problems: Low revenue generated Low enrollment (~ 200,000 acres) Moratorium on new AFTL contracts: 1974

    7. Sustainable Forest Incentive Act (MS § 290C) Established in 2001. Replaced Tree Growth & Auxiliary Forest Tax Laws. Provides financial incentive to landowners making a long-term commitment to forest stewardship.

    8. Sustainable Forest Incentive Act Requirements: 20 acre minimum (50%+ forested) No buildings (undeveloped) Use forest management plan Use MFRC harvesting guidelines Enroll for at least 4 years + 4 year waiting period to opt out (8 yrs min.) File deed restriction Public access required: >1,920 acres

    9. Sustainable Forest Incentive Act Administration Administered by Dept. of Revenue (not county assessors) Landowners required to annual certify compliance with SFIA provisions Annual payment based on higher of: $1.50/acre 2/3 of state avg. forest land property tax. Difference in forest property tax: market & current use value (state avg.)

    11. Sustainable Forest Incentive Act 2006 SFIA Statistics 731 taxpayers enrolled: 658 individuals 73 businesses 601,852 acres enrolled: 118,265 acres – individuals 483,587 acres – businesses

    12. Problems with SFIA Low level of enrollment among family forest owners. Bottleneck (perceived?) in getting forest management plan prepared.

    13. Blandin Foundation-Sponsored SFIA Study 2005 SFIA Task Force identified additional information needs: Landowner interest in SFIA at different payment levels. Landowner perspectives on current SFIA requirements.

    18. Prior awareness of SFIA Attitudes: current SFIA requirements (Deed restriction & 4-yr waiting period) Plan to get a forest management plan Per acre SFIA payment amount Factors Influencing SFIA Interest

    19. Potential Strategies for Increasing SFIA Participation Increase SFIA payment. Get landowners interested in having a forest management plan prepared. Change deed restriction & 4-year cancel notice requirements. Market to family forest owners to increase SFIA program awareness. Assist landowners in filling out SFIA paperwork

    20. SFIA & Conservation Easements

    21. Questions?

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