SF 1414

1st Engrossment - 89th Legislature (2015 - 2016) Posted on 03/16/2015 09:49am

A bill for an act
relating to taxation; Sustainable Forest Incentive Act; providing rules for transfer
of ownership; providing additional eligibility, certification, and notification
requirements; making clarifying changes; repealing obsolete provisions;
amending Minnesota Statutes 2014, sections 290C.01; 290C.02, subdivisions
1, 3, 6; 290C.03; 290C.05; 290C.055; 290C.06; 290C.07; 290C.08; 290C.10;
290C.11; proposing coding for new law in Minnesota Statutes, chapter 290C;
repealing Minnesota Statutes 2014, section 290C.02, subdivisions 5, 9.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2014, section 290C.01, is amended to read:

290C.01 PURPOSE.

It is the policy of this state to promote sustainable forest resource management on
the state's public and private lands. deleted text begin Recognizing that deleted text end new text begin The state's new text end private forests comprise
approximately one-half of the state forest land resources deleted text begin , that healthy and robust forest
land provides significant benefits to the state of Minnesota, and that ad deleted text end new text begin . These forests
play a critical role in protecting water quality and soil resources, and provide extensive
wildlife habitat, diverse recreational experiences, and significant forest products that
support the state's economy. Ad new text end valorem property taxes represent a significant annual
cost that can discourage long-term forest management investments new text begin . In order to foster
silviculture investments and retain these forests for their economic and ecological benefits new text end ,
this chapter, hereafter referred to as the "Sustainable Forest Incentive Act," is enacted
to encourage the state's private forest landowners to make a long-term commitment to
sustainable forest management.

Sec. 2.

Minnesota Statutes 2014, section 290C.02, subdivision 1, is amended to read:

Subdivision 1.

Application.

When used in sections 290C.01 to deleted text begin 290C.11 deleted text end new text begin 290C.13 new text end ,
the terms in this section have the meanings given them.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2014, section 290C.02, subdivision 3, is amended to read:

Subd. 3.

Claimant.

(a) "Claimant" means:

(1) a person, as that term is defined in section 290.01, subdivision 2, who owns
forest land in Minnesota and files an application authorized by the Sustainable Forest
Incentive Act;

(2) a purchaser or grantee if property enrolled in the program was sold or transferred
after the original application was filed and prior to the annual incentive payment being
made; or

(3) an owner of land previously covered by an auxiliary forest contract that
automatically qualifies for inclusion in the Sustainable Forest Incentive Act program
pursuant to section 88.49, subdivision 9a, or 88.491, subdivision 2.

new text begin (b) new text end deleted text begin The purchaser or grantee must notify the commissioner in writing of the sale or
transfer of the property. deleted text end Owners of land that qualifies for inclusion pursuant to section
88.49, subdivision 9a, or 88.491, subdivision 2, must notify the commissioner in writing
of the expiration of the auxiliary forest contract or land trade with a governmental unit and
submit an application to the commissioner by August 15 in order to be eligible to receive a
payment by October 1 of that same year. For purposes of section 290C.11, claimant also
includes any person bound by the covenant required in section 290C.04.

deleted text begin (b) deleted text end new text begin (c) new text end No more than one claimant is entitled to a payment under this chapter with
respect to any tract, parcel, or piece of land enrolled under this chapter that has been
assigned the same parcel identification number. When enrolled forest land is owned by
two or more persons, the owners must determine between them which person is eligible to
claim the payments provided under sections 290C.01 to 290C.11. In the case of property
sold or transferred, deleted text begin the former owner and deleted text end the purchaser or grantee deleted text begin must determine between
them which person deleted text end is eligible to claim the payments provided under sections 290C.01 to
290C.11. The new text begin new new text end owners, transferees, or grantees must notify the commissioner in
writing deleted text begin which person is eligible deleted text end to claim the payments.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for certifications and applications
due in 2015 and thereafter.
new text end

Sec. 4.

Minnesota Statutes 2014, section 290C.02, subdivision 6, is amended to read:

Subd. 6.

Forest land.

"Forest land" means land containing a minimum of 20
contiguous acres for which the owner has implemented a forest management plan that was
prepared or updated within the past ten years by an approved plan writer. For purposes of
this subdivision, acres are considered to be contiguous even if they are separated by a road,
waterway, railroad track, or other similar intervening property. At least 50 percent of the
contiguous acreage must meet the definition of forest land in section 88.01, subdivision
7. For the purposes of sections 290C.01 to 290C.11, forest land does not include (i)
land used for residential or agricultural purposes, (ii) land enrolled in the reinvest in
Minnesota program, a state or federal conservation reserve or easement reserve program
under sections 103F.501 to 103F.531, the Minnesota agricultural property tax law under
section 273.111, or land subject to agricultural land preservation controls or restrictions
as defined in section 40A.02 or under the Metropolitan Agricultural Preserves Act under
chapter 473H, (iii) deleted text begin land exceeding 60,000 acres that is subject to a single conservation
easement funded under section 97A.056 or a comparable permanent easement conveyed
to a governmental or nonprofit entity; (iv) deleted text end any land that becomes subject to a conservation
easement funded under section 97A.056 or a comparable permanent easement conveyed
to a governmental or nonprofit entity after May 30, 2013; or deleted text begin (v) deleted text end new text begin (iv) new text end land improved with a
structure, pavement, sewer, campsite, or any road, other than a township road, used for
purposes not prescribed in the forest management plan.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications made in 2016 and
thereafter.
new text end

Sec. 5.

Minnesota Statutes 2014, section 290C.03, is amended to read:

290C.03 ELIGIBILITY REQUIREMENTS.

(a) Land may be enrolled in the sustainable forest incentive program under this
chapter if all of the following conditions are met:

(1) the land consists of at least 20 contiguous acres and at least 50 percent of the
land must meet the definition of forest land in section 88.01, subdivision 7, during the
enrollment;

(2) a forest management plan for the land must be prepared by an approved plan
writer and implemented during the period in which the land is enrolled;

(3) timber harvesting and forest management guidelines must be used in conjunction
with any timber harvesting or forest management activities conducted on the land during
the period in which the land is enrolled;

(4) the land must be enrolled for a minimum of eight years;

(5) there are no delinquent property taxes on the land; and

(6) claimants enrolling more than 1,920 acres new text begin or enrolling any land that is subject
to a conservation easement funded under section 97A.056, or a comparable permanent
easement conveyed to a governmental or nonprofit entity before May 31, 2013, new text end in the
sustainable forest incentive program must allow year-round, nonmotorized access to fish
and wildlife resources and motorized access on established and maintained roads and trails,
unless the road or trail is temporarily closed for safety, natural resource, or road damage
reasons on enrolled land except within one-fourth mile of a permanent dwelling or during
periods of high fire hazard as determined by the commissioner of natural resources deleted text begin . deleted text end new text begin ; and
new text end

new text begin (7) the claimant has registered the forest management plan under clause (2) with the
commissioner of natural resources who has concurred that the land is qualified.
new text end

(b) Claimants required to allow access under paragraph (a), clause (6), do not by
that action:

(1) extend any assurance that the land is safe for any purpose;

(2) confer upon the person the legal status of an invitee or licensee to whom a duty
of care is owed; or

(3) assume responsibility for or incur liability for any injury to the person or property
caused by an act or omission of the person.

new text begin (c) The commissioner of natural resources shall annually provide county assessors
verification information regarding plan registration under paragraph (a), clause (7), on
a timely basis.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications made in 2016 and
thereafter.
new text end

Sec. 6.

Minnesota Statutes 2014, section 290C.05, is amended to read:

290C.05 ANNUAL CERTIFICATION.

On or before July 1 of each year, beginning with the year after the deleted text begin original
claimant has received an approved application deleted text end new text begin property tax parcel was enrolled under the
sustainable forest incentive program new text end , the commissioner shall send each claimant deleted text begin enrolled
under the sustainable forest incentive program deleted text end a certification form. For purposes of this
section, the deleted text begin original deleted text end claimant is the person that deleted text begin filed the first application under section
290C.04 to enroll the land in the program deleted text end new text begin is the current property owner on record new text end . The
claimant must sign new text begin and return new text end the certification new text begin by August 15 of that same year new text end , deleted text begin attesting deleted text end new text begin
and (1) attest new text end that the requirements and conditions for continued enrollment in the program
are currently being met, and deleted text begin must return the signed certification form to the commissioner
by August 15 of that same year deleted text end new text begin (2) provide a report in the format and manner determined
by the commissioner on what management practices have been carried out on the enrolled
property in the past year new text end . If the claimant does not return an annual certification form by
the due date, the provisions in section 290C.11 apply.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for certifications and applications in
2015 and thereafter.
new text end

Sec. 7.

Minnesota Statutes 2014, section 290C.055, is amended to read:

290C.055 LENGTH OF COVENANT.

(a) deleted text begin The covenant remains in effect for a minimum of eight years. deleted text end new text begin Claimants enrolling
any land that is subject to a conservation easement funded under section 97A.056 or a
comparable permanent easement conveyed to a governmental or nonprofit entity before
May 31, 2013, may enroll their land under a covenant with a duration of eight years. All
other claimants may choose to enroll their land under a covenant with a duration of eight,
20, or 50 years. new text end If land is removed from the program before it has been enrolled for deleted text begin four
years deleted text end new text begin half the number of years of the covenant's duration new text end , the covenant remains in effect
for deleted text begin eight years deleted text end new text begin the entire duration of the covenant new text end from the date recorded.

(b) If land that has been enrolled for deleted text begin four years deleted text end new text begin half the number of years of the
covenant's duration new text end or more is removed from the program for any reason, there is a
waiting period before the covenant terminates. The covenant terminates on January 1 of
the fifth new text begin , 11th, or 26th new text end calendar year new text begin for the eight-, 20-, or 50-year covenant respectively,
new text end that begins after the date that:

(1) the commissioner receives notification from the claimant that the claimant wishes
to remove the land from the program under section 290C.10; or

(2) the date that the land is removed from the program under section 290C.11.

(c) Notwithstanding the other provisions of this section, the covenant is terminated:

(1) at the same time that the land is removed from the program due to acquisition of
title or possession for a public purpose under section 290C.10; or

(2) at the request of the claimant after a reduction in payments due to changes in the
payment formula under section 290C.07.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for certifications and applications
due in 2016 and thereafter.
new text end

Sec. 8.

Minnesota Statutes 2014, section 290C.06, is amended to read:

290C.06 CALCULATION OF AVERAGE ESTIMATED MARKET VALUE;
deleted text begin MANAGED FOREST deleted text end new text begin RURAL VACANT new text end LAND.

The commissioner shall annually calculate a statewide average estimated market
value per acre for class deleted text begin 2c managed forest deleted text end new text begin 2b rural vacant new text end land under section 273.13,
subdivision 23.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for calculations made in 2016 and
thereafter.
new text end

Sec. 9.

Minnesota Statutes 2014, section 290C.07, is amended to read:

290C.07 CALCULATION OF INCENTIVE PAYMENT.

An approved claimant under the sustainable forest incentive program is eligible to
receive an annual payment. The payment shall equal deleted text begin $7 per acre for each acre enrolled
in the sustainable forest incentive program deleted text end new text begin a percentage of the property tax that would
be paid on the land determined by using the previous year's statewide average total tax
rate for all taxes levied within townships or unorganized territories, the estimated market
value per acre as calculated in section 290C.06, and a class rate of one percent as follows:
(1) for claimants enrolling land that is subject to a conservation easement funded under
section 97A.056 or a comparable permanent easement conveyed to a governmental or
nonprofit entity before May 31, 2013, under an eight-year covenant, 25 percent; (2) for
claimants enrolling land that is not subject to a conservation easement under an eight-year
covenant, 50 percent; (3) for claimants enrolling land that is not subject to a conservation
easement under a 20-year covenant, 75 percent; and (4) for claimants enrolling land that
is not subject to a conservation easement under a 50-year covenant, 100 percent. The
calculated payment shall not increase or decrease by more than ten percent relative to the
payment received for the previous year new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for calculations made in 2016 and
thereafter.
new text end

Sec. 10.

Minnesota Statutes 2014, section 290C.08, is amended to read:

290C.08 ANNUAL INCENTIVE PAYMENT; APPROPRIATION.

Subdivision 1.

Annual payment.

An incentive payment for each acre of enrolled
land will be made annually to each claimant in the amount determined under section
290C.07. new text begin By September 1 of each year, the commissioner of natural resources will certify
to the commissioner the eligibility of each claimant to receive a payment. new text end The incentive
payment shall be paid new text begin by the commissioner new text end on or before October 1 each year based on
the certifications due August 15 of that year. Interest at the annual rate determined under
section 270C.40 shall be included with any incentive payment not paid by the later of
October 1 of the year the certification was due, or 45 days after the completed certification
was returned or filed if the commissioner accepts a certification filed after August 15 of
the taxes payable year as the resolution of an appeal.

Subd. 2.

Appropriation.

The amount necessary to make the payments under this
section is annually appropriated to the commissioner from the general fund.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for certifications and applications in
2016 and thereafter.
new text end

Sec. 11.

Minnesota Statutes 2014, section 290C.10, is amended to read:

290C.10 WITHDRAWAL PROCEDURES.

new text begin (a) new text end An approved claimant new text begin or current owner of lands enrolled new text end under the sustainable
forest incentive program for a minimum of deleted text begin four years deleted text end new text begin half the number of years of the
covenant's duration new text end may notify the commissioner of the intent to terminate enrollment.
Within 90 days of receipt of notice to terminate enrollment, the commissioner shall
inform the claimant in writing, acknowledging receipt of this notice and indicating the
effective date of termination from the sustainable forest incentive program. Termination
of enrollment in the sustainable forest incentive program occurs on January 1 of the fifth new text begin ,
11th, or 26th new text end calendar year new text begin for the eight-, 20-, or 50-year covenant respectively new text end that begins
after receipt by the commissioner of the termination notice. After the commissioner issues
an effective date of termination, a claimant wishing to continue the land's enrollment
in the sustainable forest incentive program beyond the termination date must apply for
enrollment as prescribed in section 290C.04. A claimant who withdraws a parcel of land
from this program may not reenroll the parcel for a period of three years. Within 90 days
after the termination date, the commissioner shall execute and acknowledge a document
releasing the land from the covenant required under this chapter. The document must be
mailed to the claimant and is entitled to be recorded.

new text begin (b) Notwithstanding paragraph (a), new text end the commissioner may allow early withdrawal
from the Sustainable Forest Incentive Act without penalty when the state of Minnesota,
any local government unit, or any other entity which has the power of eminent domain
acquires title or possession to the land for a public purpose deleted text begin notwithstanding the provisions
of this section deleted text end . In the case of deleted text begin such deleted text end new text begin an eligible new text end acquisition new text begin under this paragraph new text end , the
commissioner shall execute and acknowledge a document releasing the land acquired by
the state, local government unit, or other entity from the covenant.

new text begin (c) Notwithstanding paragraph (a), the commissioner shall allow early withdrawal
from the Sustainable Forest Incentive Act without penalty when the state acquires a
permanent conservation easement on the enrolled property and the conservation easement
is at least as restrictive as the covenant required under section 290C.04. In the case of an
eligible easement acquisition under this paragraph, the commissioner shall execute and
acknowledge a document releasing the land subject to the easement from the covenant.
new text end

new text begin (d) Notwithstanding paragraph (a), the commissioner shall allow early withdrawal
from the Sustainable Forest Incentive Act without penalty for land that is subject to fee
or easement acquisition or lease to the state of Minnesota or a political subdivision
of the state for the public purpose of a paved trail. In the case of an eligible fee or
easement acquisition or lease under this paragraph, the commissioner shall execute and
acknowledge a document releasing the land subject to fee or easement acquisition or lease
by the state or political subdivision of the state.
new text end

new text begin (e) new text end All other enrolled land must remain in the program.

new text begin EFFECTIVE DATE. new text end

new text begin Paragraphs (c) and (d) are effective the day following final
enactment. The remainder of this section is effective for notifications made in 2016 and
thereafter.
new text end

Sec. 12.

new text begin [290C.101] TRANSFER OF OWNERSHIP.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, "new owner" means a
prospective purchaser or grantee.
new text end

new text begin (b) For purposes of this section, "owner" means a grantor or seller.
new text end

new text begin Subd. 2. new text end

new text begin Disclosure to new owner. new text end

new text begin When lands enrolled in the sustainable forest
incentive program are sold or transferred to new owners, the owner must:
new text end

new text begin (1) disclose to the new owner information describing the imposition of penalties in
section 290C.11 for noncompliance with sections 290C.03 and 290C.04; and
new text end

new text begin (2) obtain the signature of the new owner on a statement acknowledging the
disclosures.
new text end

new text begin Subd. 3. new text end

new text begin Notification to commissioner. new text end

new text begin (a) An owner must notify a new owner
if the owner transfers all of the owner's land enrolled in the sustainable forest incentive
program to the new owner. A new owner must notify the commissioner within 60 days
of the transfer of title to the property if the owner has notified the new owner that the
owner has transferred all of the owner's land enrolled in the sustainable forest incentive
program to the new owner.
new text end

new text begin (b) An owner who transfers only part of the owner's land enrolled in the sustainable
forest incentive program, or all of the owner's land enrolled in the sustainable forest
incentive program to more than one new owner, must notify the commissioner in writing
of the transfer within 60 days of the transfer of title. The notification must include the
legal description of the transferred property, the tax parcel number, and the name and
address of the new owner.
new text end

new text begin (c) Upon notification, the commissioner shall inform the new owner of the
restrictions of the covenant required by section 290C.04, and that the new owner must
register a new forest management plan within two years from the date the title of the
property was transferred.
new text end

new text begin Subd. 4. new text end

new text begin Termination of enrollment. new text end

new text begin The commissioner will terminate enrollment
in the sustainable forest incentive program according to the procedure in section 290C.10
for failure of the new owner to register a forest management plan within the time period
in subdivision 3, paragraph (c).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 13.

Minnesota Statutes 2014, section 290C.11, is amended to read:

290C.11 PENALTIES FOR REMOVAL.

(a) If the commissioner determines that land enrolled in the sustainable forest
incentive program is in violation of the conditions for enrollment as specified in section
290C.03, the commissioner shall notify the deleted text begin claimant deleted text end new text begin current owner of the enrolled land new text end of
the intent to remove deleted text begin all deleted text end new text begin that tax parcel of the new text end enrolled land new text begin where the violation has occurred
new text end from the sustainable forest incentive program. The deleted text begin claimant deleted text end new text begin current owner of the affected
tax parcel new text end has 60 days to appeal this determination under the provisions of section 290C.13.

(b) If the commissioner determines the land is to be removed from the sustainable
forest incentive program new text begin due to the construction of a building new text end , the deleted text begin claimant deleted text end new text begin current owner
of the tax parcel that is in violation new text end is liable for payment to the commissioner new text begin of revenue new text end
in the amount equal to new text begin (1) new text end the payments received under this chapter for the previous
four-year period new text begin in the case of an eight-year covenant, ten-year period in the case of a
20-year covenant, and 25-year period in the case of a 50-year covenant new text end , plus interest new text begin ; and
(2) 25 percent of the estimated market value as property reclassified under section 273.13,
due to the structure being on the taxed parcel, as determined by the assessor new text end .

new text begin (c) If the commissioner determines that the land is to be removed due to changes
in the use of the land for uses other than forestry purposes, the current owner of the tax
parcel that is in violation shall be liable to the commissioner of revenue in an amount
equal to (1) 30 percent of the estimated market value as property reclassified under section
273.13, due to the change in use, as determined by the assessor; and (2) the payments
received under this chapter for the previous four-year period in the case of an eight-year
covenant, ten-year period in the case of a 20-year covenant, and 25-year period in the
case of a 50-year covenant, plus interest.
new text end

new text begin (d) new text end The claimant has 90 days to satisfy the payment for removal of land from the
sustainable forest incentive program under this section. If the penalty is not paid within
the 90-day period under this paragraph, the commissioner shall certify the amount to the
county auditor for collection as a part of the general ad valorem real property taxes on the
land in the following taxes payable year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 14. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2014, sections 290C.02, subdivisions 5 and 9, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end