Class 2c Managed Forest Land
September 2008
Minnesota has a new property tax classification, Class 2c Managed Forest Land (MFL), which can reduce the burden of property taxes on some actively managed woodland. This classification only applies to land covered by a current forest management plan that has been registered with the Department of Natural Resources (DNR). It is extended to qualifying land by the county assessor once a careful review of the landowner’s application has been completed. Upon approval, the land qualifying for this property tax classification receives a reduced class rate of 0.65 percent until its use changes or it no longer qualifies. Land not included in a forest management plan, land included in such a plan but not filed with the DNR, or land with eligible acres that has not been certified via the application process is not entitled to the MFL classification and is classified according to its primary use or highest and best use.
What is Managed Forest Land? What are the eligibility requirements for this property tax classification?
Managed Forest Land is defined as unplatted real estate that is rural in character, is not used for agricultural purposes, and is not improved with a either a major or primary structure (i.e. minor, ancillary non-residential buildings may be associated with this property type---sheds or primitive structures having an aggregate size of 300 square feet or less, adding minimal value, and not used residentially except for occasional overnight use for hunting or other outdoor activities). The land has to be managed through a forest management plan that was developed by a DNR forester or a qualified natural resource professional within the last ten years, and it must be registered with the state DNR office in St. Paul, Minnesota. This land cannot be enrolled in the Sustainable Forest Incentive Act (SFIA) program, Conservation Reserve Program (CRP), Conservation Reserve Easement Program (CREP), Reinvest in Minnesota (RIM), or the Green Acres (GA) program. Additionally, the land area has to be at least 20 acres in size and the total enrolled acreage cannot exceed 1,920 acres statewide.
Can a rural property improved with a building site, a major building, or a primary structure with a forest management plan still qualify for the Managed Forest Land classification?
Yes, if the property is improved with either a major or primary structure or has an improved building site with water, sewer, or electrical hookups, it will be split-classified. By law, 10 acres assigned to the structure or building site will be classified according to its primary use, while the remaining land area under the plan totaling 20 acres or more will be classified as Managed Forest Land.
How does one obtain a forest management plan and register it?
To obtain information about the development of a forest management plan for properties located within Stearns County, one is encouraged to contact this area’s DNR forester by calling 320-255-4279, extension 230. This person or a professional designee will arrange an appointment to assess the potential of the woodland as well as the objectives that the landowner has for the property. After a review has been completed, a management plan will be devised and presented to the landowner detailing specific management practices that could improve wildlife habitat, preserve the land’s natural beauty, provide recreational opportunities, protect soil and water resources, and offer help in growing trees and other vegetation. This plan may also furnish information about certain cost-share programs, educational materials, and technical assistance that is available to implement stewardship strategies and solutions in the management of woodland. Once the plan has been given to the landowner, its registration with the state DNR office is voluntary. The landowner has a choice to either register the plan or not. By registering the plan, the landowner will qualify for plan updates, be entitled to field days and seminars, and be eligible for cost-share programs.
What tax benefit does a landowner receive if the property is classified as Class 2c Managed Forest Land?
The Class 2c Managed Forest Land classification may be attractive to some landowners because it will generally result in lower property taxes based on a reduced class rate of 0.65 percent. Woodland not eligible for this new classification will be taxed at a higher class rate because it could be classified as: (1) Class 2b Rural Vacant Land, Both Homestead and Non-Homestead, with a class rate of 1.00 percent; (2) Class 4b(4) Unimproved Residential with a class rate of 1.25 percent if the parcel is small and the highest and best use is determined to be residential; or (3) Class 4c(1) Seasonal Recreational Residential, Non-Commercial with a class rate of 1.00 percent for the first $500,000 of taxable market value and a class rate of 1.25 percent on taxable market value over $500,000 in addition to being subject to a state general tax levy. Only a multi-acre woodlot that is producing maple syrup or short rotation woody crops may be classified as Class 2a Agricultural 1st Tier Homestead Property and have lower property taxes because the class rate is 0.50 percent for the first $890,000 of taxable market value. Woodlot that is contiguous to productive agricultural land under the same ownership and classified as Class 2b Agricultural 1st Tier Homestead Property will also have lower property taxes because the 0.50 percent class rate applies to the first $890,000 of taxable market value.
How does one apply for the Managed Forest Land Classification?
A landowner must apply to receive the Managed Forest Land classification because enrollment is not automatic. The 2c Managed Forest Land application may be requested in writing, e-mailing, calling, or visiting the county assessor’s office. It may also be downloaded from the Assessor Forms page found on the Stearns County Assessor’s Office website. The applicant has to complete this form and submit it with all required information to the county assessor in a timely manner. The name and address of the landowner requesting enrollment is needed. Specific parcel information---the parcel identification number for each parcel of land to be enrolled, the total acreage of each parcel, and the number of acres that is to be enrolled for each particular parcel---is required. Signatures and verifications are requested declaring that the furnished information is correct, certifying ownership of the land, acknowledging that the provisions of the land’s management plan will be followed, and certifying that the land is not enrolled in the SFIA program, CRP, CREP, RIM, or the Green Acres program. The applicant has to attach a copy of the property tax statement for each parcel of land listed on the application as well as a copy of the forest management plan that has been developed or updated within the last 10 years.
Is there an established deadline for making an application for the 2c property tax classification?
All applications and required documents are to be sent to the county assessor by September 1st for the 2008 assessment, taxes payable in 2009. In future years, the deadline will be May 1st to qualify for the current year’s assessment, taxes payable in the following year. Information received after the deadline will be denied for that year. If the application is not completed in its entirety and the requested attachments are not provided, the application may be denied or its processing delayed.
Does one have to submit an application to the county assessor every year to qualify for this classification?
No, it is not necessary to reapply for the Class 2c MFL classification each year. The Department of Natural Resources will provide the county assessor with annual verification information by furnishing a list of property owners who have a registered forest management plan. Thus, the woodland will continue to qualify for this classification if the name of the landowner appears on this updated list every year.
Is there a penalty to withdraw property from the Managed Forest Land Classification?
Unlike the Tree Growth and Auxiliary Forest Lands program, the Sustainable Forest Incentive Act program, and the Green Acres tax deferment program, land receiving this classification can be removed without penalties or sanctions. The classification must be changed by the county assessor if the land area no longer qualifies as managed forest land or its use changes. It will be adjusted to reflect either its primary use or highest and best use. Should a landowner give false information during the application process in order to avoid or reduce property taxes on the land, then a fine of up to $3,000 and/or one year in jail could be considered a penalty for breaking the law.