Strategy Target: Make better use of property tax and other incentive programs to cost-effectively increase family forestland under sustainable management.

Highlights . . .

From Wisconsin -- The Wisconsin Healthy Forest program is in the midst of its second year. The program has gradually taken shape and become more defined. The first year was spent getting grants, developing a framework and recruiting the first group of landowners. We have taken what we have learned so far and created a handbook that we hope more clearly conveys what the program is about.
Most of our meetings so far have been with foresters as we worked through the specifics of how the program would impact landowners.
About 80 landowners received assistance in the two pilot projects last year. I've been calling them for a satisfaction survey, and so far they are pleased with the program. Recruitment for 2007 will begin soon.

From Missouri -- Since the Wingspread gathering, the Eastern Ozarks Forestry Council and its partners have successfully promoted the introduction of a new FY07 EQIP practice in Missouri -- Prescribed Forestry -- which pays an incentive to landowners to arrange for an inventory-based forest management plan.

If the plan is prepared by an NRCS-registered Technical Service Provider, then the landowner is also eligible for cost-share. The EOFC also facilitated the successful application by the Wayne Co. SWCD Board for an Information/Education grant from the Soil and Water Commission of the Missouri Department of Natural Resources. This grant has enabled presentations to Missouri Farm Bureau., Missouri Farmers Union, and SWCD groups in the 14 counties of the EOFC membership region to advise landowners of the benefits of active forest management and this new EQIP practice.

We are awaiting information from the NRCS state office to indicate the number of applications received for this practice and their success rate, but indications so far are of a good response in the timber-rich southeastern Missouri Ozarks.
The EOFC is partnering with MDC and Pioneer forest to organize a workshop and field day for loggers and landowners that, among other topics, will discuss how to facilitate good logging practices on private land.

From Minnesota -- We have been doing work here at the Blandin Foundation through our Vital Forests / Vital Communities Initiative to advance the use of forest management plans on family-owned woodlands:

In May 2006 we hosted a Family Forest Stewardship Conference, at which the participants supported four recommendations:

• Increase family forest land under sustainable management.
• Establish a Family Forest Initiative Fund of approximately $2,000,000.00 (annual) that is self-sustaining and managed through the Forest Resource Management section of DNR.
• Revise the Sustainable Forestry Incentive Act.
• Revamp the ad valorem property tax system's inherent bias to overtax undeveloped land in comparison to developed land with respect to the public services provided to their owners.

Since then, work has moved forward on revising the Sustainable Forestry Act. The discussion continues about revamping the ad valorem property tax. Plans are in the works for a follow on conference in September 2007.

. . . & Reports from Around the Country

Michigan -- Michigan passed a tax break for certified forest land. Wisconsin is exploring a similar option.

New York -- New York State RPTL 480a has been somewhat helpful, but the legislation requires reform.

Wisconsin -- in WI there have been some advances (e.g. with Ag forestland) BUT - the net affect of use value assessment in agriculture being balanced on the back of woodland owners is an enormous problem and changes to MFL have made that program less attractive

None yet in Washington State. Our Forest Stewardship Program may well fold as we hear that Federal dollars will be cut 40% effective 10/01/07. Our FSP has had no state dollars for the past several years.

Seems there have been advancements in the Upper Midwest and the Pacific Northwest, from what I hear/read, but in the Southeast there's been no significant change in the status quo. Locally, we actually have counties doing away with land use valuation as state and federal support dwindle and as property values rise due to conversion of ag and forested land.

Indiana -- State of Indiana is currently hearing a bill to give state income tax deductions to forest landowners for property tax expenses, forest management expenses, capital gains from timber harvest and contributions of land. This bill is expected to pass.

Idaho -- In Idaho a bill has been presented to the legislature that, if enacted, would give a State income tax credit to family ranch, farm, and forest owners who donate conservation easements. Managed forest and agriculture property tax classifications are currently among the lowest 'use' rates available in Idaho.

West Virginia -- In West Virginia there have been repeated attempts to apply vindictive and extremely high tax rates to large acreage properties.

Minnesota -- The Blandin Foundation provided $50,000 to survey 1,024 randomly selected family forest owners on their knowledge and impressions on the MN Sustainable Forest Incentive Act. The survey results are being used in the 2007 legislative session to amend the SFIA to address some of the outcomes of the survey (e.g. increased payments, etc.)to encourage more landowners to enroll.

Virginia -- Carroll County Virginia has implemented a land use program which allows the owner to pay lower property taxes on forestland.

Wisconsin -- We have been working to improve our Managed Forest Law tax incentive program and maintain our forest landowner grant program in Wisconsin and are supporting the maintenance of USFS State and Private Forestry funding to states.

Massachusetts -- The MA current use program-Chapter 61-was just revised to the good, and includes changes such as removing the 8% stumpage tax, making the assessment value of forest and farm land more similar (equitable), and more consistent treatment between towns of the enrollees that are not actively managing, but not developing.

Wisconsin -- The Managed Forest Law program in Wisconsin has been modified and continues to be a good incentive to get people into sustainable management.

Wisconsin -- Enforcement of Wisconsin's Managed Forest Law management plans has been enhanced but there remain several problems with the program. Landowners are continuing to pay an unrealistic severance tax on their product and are subject to forced sale in a low market. Land should be taxed at its productive market value just like ag land so landowners can practice sustainable forestry without State mandates.

State officials -- governors -- are banding together to sign cooperative agreements to deal with solutions to greenhouse gas emissions on a regional basis. I don't know the specifics of their plans, but on both the east and west coasts there are multi-state coalitions that are looking for good incentives to get their residents to participate.

Conservation easements -- there are more programs but they are not increasing family forest lands under sustainable management. These landowners were already managing sustainably, they just wanted tax benefits.

Wisconsin -- I know of Managed Forest Law, WFLGP for Wisconsin, and Stewardship. I like the fact that these WI programs are certified programs and the contracts have become more detailed and descriptive. Our old MFL agreement from 1980's is literally one sentence long. Our current Managed Forest Law is very detailed and prescriptive. The tax incentive is a huge motivator and opportunity for effecting good management on private lands.

There are a plethora of tax reduction programs. Participation rates in some states are surprisingly low - how can we increase this? I am worried about substitution effects for some of the programs.

Virginia -- Virginia State tax credit for conservation easements has suffered a setback as a result of its success: in 2007 the allowable credit dropped from 50% to 40% of the value of the easement. Also there is in 2007 a $100 million annual cap on the total amount of statewide credits, although unusable credits beyond the cap will carry over to the next year. Perhaps more importantly, there remains uncertainty in valuing sustainable forestry viz. the conservation easement. The question remains: How much of a stand of timber's value can be considered in determining the value of an easement when the timber is restricted to sustainable forest management? There have been cases where tax credits have been allowed for this, so progress is being made.

Minnesota -- State of Minnesota has Sustainable Forestry Incentive Act that pays landowners on per acre basis for having a 10 year mgmt. plan on their property. This is good program but not enough awareness and not enough qualified plan writers.

Iowa -- Iowa has maintained its Forest Reserve system (no property tax on timber that meets the rules) although it comes under legislative attack almost annually. I have no knowledge of a government program that specifically addresses sustainability.

Indiana – In Indiana we are promoting the classified forest system which recently has been certified but still needs refining. In the general assembly we are attempting to get a bill passed which gives wooodland owners enrolled in the classified system a tax credit on timber sales and expenses associated w/managing their forestland. Also we are trying to get a forest legacy award for woodland owners who have held their property for a certain number of years. this is still to be determined. We believe this will help pass on the woodlands to the next generation.

Vermont -- VT legislature in process of creating a summer study committee to study property taxes and current use program.

Michigan -- Recent legislation in Michigan recognizing third-party certification as a means of qualifying forested land for a tax exemption (Act No. 378, Public Acts of 2006,Approved by the Governor, September 26, 2006).

Oregon -- We have lost ground, due to the discontinuation of the Stewardship Agreement program and helped us here in Oregon. No change locally...although there is currently a review of timber - grazing zone and associated tax rate within the county. More about getting the zone boundaries right than changing the incentives.

Oregon -- Currently the legislature is drafting a loan program with more favorable terms to small forest land owners in Oregon.

Minnesota -- Don Arnosti of the Community Forestry Resource Center testified before a legislative committee reviewing the Minnesota Sustainable Forest Incentive Act (SFIA). Don argued that the program in its current form is being used to the financial advantage of the state's largest forestland owners, but it achieves little in terms of ecological goals because of the short length of required enrollment. CFRC is developing a fact sheet for private landowners to inform them about the ways FSC certification can dovetail with SFIA tax incentives for forestland in Minnesota.

California -- Emergency Harvest Exemption and Emergency Condition provisions in the CA Forest Practices Act had made it easier and less expensive for landowners to do forest restoration treatments. Pacific Forest Trust has been involved in establishing carbon credits for sustainable forest management.

Wisconsin -- In WI, the managed forest law and the state's private forestry program as well as the state incentive program WFLGP have worked well. We need a program that is less regulatory that would be attractive to people that are not looking for a large tax break. Amending the farmland preservaton act to include forestland with a requirement that the forest land be certified or under a group certification program would be step in the right direction.

The federal Pension Reform Act created a two-year window for favorable tax treatment for conservation easement donations. The President's 2008 budget and some members of Congress are interested in making this a permanent provision.