Green Acres clarification ensures law’s usefulness in protecting farmland

Written by Jonathan Eisenthal

Modifications to the law known as the Green Acres law will help to maintain its usefulness in preserving farmland on the edges of Minnesota’s metropolitan areas, which have faced development pressure and taxation policies that led to the loss of agricultural acres. The changes were recently passed by the Minnesota legislature and signed into law by Gov. Dayton.

“I farm with two brothers, and we’ve utilized Green Acres for years for our land in Rice County. Dakota County has also made use of Green Acres for years, but it is a county-by-county thing and each county has its own particular set of issues, each county has a unique makeup in its tax base and that influences these policies,” said Bruce Peterson, who farms in rural Northfield, and serves as a director on Minnesota Corn Growers Association board. Peterson has followed the developments in the Green Acres amendments, as a member of MCGA’s government relations committee.

Peterson noted that development pressure has slowed down, and so have tax savings realized through Green Acres.

“But go a few years down the road and the housing market returns to a faster pace and you could easily get back to that kind of pressure,” said Peterson. “Five, ten years down the road, this could save us money again, so it’s good to have it in place.”

At the height of urban edge land development in the mid2000s, some farmers with land closer to the core participated in “IRS-1031” exchanges in order to take advantage of the worth of the land to residential and commercial developers. They sold such parcels and did so without undue tax liability because, under 1031, the proceeds can be used in the purchase of commensurate property–the farm producers were able to purchase more acreage by going farther out from the urban core.

Elizabeth Tanner, director of advocacy and strategic partnerships for MCGA, explained the changes to Green Acres: “The new law clarifies that the purpose of the program is to preserve farmland by mitigating the property tax impact of increasing land values due to nonagricultural economic forces….also, though it keeps the Rural Preserve program for class 2b land, it eliminates the requirements for landowners to sign a minimum 8-year covenant pledging the land will remain unfarmed and for landowners to prepare a conservation assessment plan.”

Though this didn’t go as far as was suggested in MCGA resolutions, it does refocus the law to its original intent and allow other conservation programs to cover land conservation in a way that makes sense for farm operations.

“The real estate market has calmed down for now, but it’s good to have Green Acres in place,” said Peterson. “The cost of land is still going up for farmers, but it’s the price of corn and beans that’s driving it, rather than home values, and that’s the way it ought to be for Minnesota’s croplands.”

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