Forest Landowners - SFIA program or 2C tax classification

[bigbluepirahna]

Fellow forest landowners - For those of you enrolled in the SFIA or 2C tax classification, wondering what your experiences have been with the forest management plan process and follow-up down the road. Did you go with the DNR Forester or private consultant to help you with your plan. We have a quarter section of hunting land in OT Co. and our taxes went through the roof this year when we lost our AG status. We have started the stewardship process, but haven't decided on a plan yet. Sounds like we'll have to pay for the plan now that the DNR is short on funds. Thanks.

[luckey]

We did ours forest managment plan about 7-8 years ago. I believe we used the DNR forester. I know we did not have to pay directly for the plan. Last year we enrolled our property in the Class 2c – Managed Forest Land

Minnesota Laws 2008, chapter 366 (House File 3149), created Class 2c Managed Forest Land. Qualifying land receives a class rate of 0.65 percent. This classification is made available to unplatted property that is rural in character, not used for agricultural purposes, and not improved with a structure. (A minor ancillary nonresidential structure does not disqualify the property.) The property must have a DNR approved Forest Management/Stewardship Plan in order to qualify for this classification.

I just got the tax info for 2010 and the taxes are lower even as the value has gone up. As described above, they calculate the tax and then you pay 65% of that. Of course when they raise the land value, the savings is less than 35%.

[bigbluepirahna]

Have you looked into the SFIA program and opted for the 2C tax break instead? Do you not qualify for SFIA or were you not aware of it? Seems like it might be the better way to go. What has been your experience with the DNR mgmt plan...was it helpful, are suggestions cost effective, to you have to follow most points to keep the tax break, etc. Thanks.

[luckey]

bigblue..

Yes, I looked into the SFIA program. I even went to one of the first meetings on the subject the DNR held many years ago. I guess the biggest reason I didn't go with the SFIA is the covenance that gets put on your property. The 2c classification was new in 2008. You had to sign up by August of 2008 to have it recorded this way for 2009 and the first tax reduction would be for the 2010 tax year. (from this I gather if you signed up now, you would see a tax break for the 2012 tax year)

We were given an extensive Forest Stewardship Plan. During it's development, the Forester did an on site review as well as other research. He wanted to know what our plans were for the land. For example, maximize timber production or enhance wildlife habitate. The plan covered, cutting wood, releasing trees, planting trees, open field managment etc. All this for short range and long range goals. We can do as little or as much of the plan. There are no requirments that you do the recommendations. The Stewardship Plan in and of it's self does not help reduce your tax. However, to qualify for other tax incentives, you must have a current (<10 year old) plan.

[hockeybc69]

Kind of a bummer that the Stewardship plan is out of pocket now.

But as I understand, its not too bad of a price. Worth it for a couple hundred bucks or so. There is a ton of great info in that 3 ring binder when they are done.

[hockeybc69]

Also, a slight spin off on the topic, but very worth your while to check into.

Contact your local FSA/NRCS office and inquire about any WHIP(Wildlife Habitat Improvement Program) available.

Since you are in OTC, specifically ask about the Buckthorn removal program. It pays around $100 per acre to you for removal of buckthorn on enrolled acres. Very very lucrative to you, and your wildlife. We just completed a 22 acre chunk and ended up with payments to us of over $2000. That aint no chump change.

Contact Jon Frie if you are the West Ottertail area. Great guy. We just met with him Monday of this week and lined up a boatload of things for 2010/2011.

[bigbluepirahna]

thanks hockey. i will see if we can get ahold of him.

thanks for the help as well lucky. the convenance you mentioned, is that the part about not developing the land for 8 years or building structures? if that's it, it won't be a problem for us as it's strictly hunting land and we'll probably exclude 3 out of the 160 incase we put up a cabin some day. Let me know if there's actually more to it than that.

thanks for all the insight guys... and happy turkey day.

[luckey]

The covenance doesn't end after 8 years it runs with the land. You can petition to terminate the covenance, but it will take 4 years to do (if approved). Also, one other restriction is important. You cannot make a road on the property.

RESTRICTIONS

As the claimant, on behalf of all the owners and myself, I accept all of the following restrictions on the property. These restrictions shall run with the property and bind me, all other owners, our heirs, and any future owners as provided under the SFIA law. The restrictions are a condition for entrance into the SFIA program and are required in order to receive an annual incentive check from the Department of Revenue. The restrictions are:

The property is not and will not be developed in violation of the provisions of the SFIA. This means that the property is not and will not be:

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used for residential purposes;

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used for agricultural purposes;

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enrolled in the Reinvest in Minnesota (RIM) program or in a state or federal conservation reserve or easement reserve program (CRP or CREP) under sections 103F.501 to 103F.531;

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enrolled in the Minnesota Agricultural Property Tax Law (also known as Green Acres) under section 273.111;

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subject to agricultural land preservation controls or restrictions as defined in section 40A.02 or the Metropolitan Agricultural Preserves Act (also known as Ag Preserves) under chapter 473H; or

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improved with a structure, pavement, sewer, permanent campsite, or any road (other than a township road), that are used for purposes not prescribed in the forest management plan for the property;

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classified as 2c Managed Forest Land under section 273.13.