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31st Senate District Report - Senator Kathleen Vinehout
Who’s Using “Use Value”?
July 14, 2010
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“Do developers misuse property tax breaks intended for farmers?”
This question was posed to the Legislative Audit Bureau staff. Last week,
auditors released results of their review of the Use Value Assessment law.
Back in 1995, the Legislature created the Use Value law to ease property
taxes on farmers and cut down on urban sprawl. Land used for agriculture
would be assessed at the value of its agricultural “use” - not its market
value.
By most accounts, the Use Value law has been successful. Farmers are not
forced out of business because of high property taxes which helps promote a
thriving agriculture economy that benefits all state taxpayers.
Critics of the Use Value Assessment law claim non-farmers have benefited in
a way the people of the state never intended. Land destined for development
but still in crops is being valued as agricultural land.
The audit sought to answer the question of the misuse of use value.
The auditors found that farm land in large cities is more likely to be owned
by a developer than a farmer. It seems, the bigger the city, the more likely
this is so.
Among the 14 municipalities examined in the audit, less than 1% of
agricultural land in Akan Township in Richland County was owned by a real
estate or property development company. But more than half of the ag land
within Appleton and Sun Prairie city limits was owned by such a company.
The audit also found that agricultural land in some cities is more likely to
be platted. While only 13.5% of the parcels in Appleton were platted, almost
all (92%) of the parcels in Middleton were platted. And the audit showed the
likelihood of platting was related to parcel size. The average size parcel
in Middleton was only 1.3 acres, but in Appleton more than half were over
ten acres.
There have been numerous efforts to keep land destined for development out
of Use Value Assessment.
The most recent attempt was during the last budget debate. A proposal
offered by a colleague made land platted for development or not zoned for
exclusive agriculture ineligible for Use Value Assessment. But sometimes
land that is platted is not developed. And many times farmland that is not
zoned ‘agricultural’ is used for production agriculture.
Zoning is controlled by local government and zoning ordinances vary widely
across the state.
For example, many townships in Trempealeau and Pierce Counties are zoned
‘rural residential’ even though most of the land is in production
agriculture. The city of Eau Claire removes all agricultural zoning on land
it annexes from neighboring townships, regardless of its previous zoning and
its current use.
Conservative estimates are that more than half a million production
agriculture acres in Wisconsin are zoned rural residential and another
quarter million ag acres are within cities and villages. Together - if that
budget proposal had passed - nearly one-twelfth of Wisconsin farmland would
have been removed from Use Value Assessment.
Removing this land from Use Value would have created a massive property tax
increase for farmers. In fact, the audit showed the 387 acres of farm land
in the Eau Claire city limits would have seen over a 100-fold increase in
taxes.
Working quickly with a few rural Assembly colleagues, I was able to defeat
that budget proposal.
Solving the problem of unintended tax breaks for developers doesn’t need to
be like using a bomb to level an anthill. The problem of misusing Use Value
is best handled by the assessors responsible for inspecting the property.
Some assessors interviewed for the audit kept visiting questionable property
and asked owners for verification the land is in production agriculture. Tax
forms, lease agreements and other documents can be used to verify the actual
use of the land.
The Use Value Assessment was not intended to benefit developers. But in
crafting a solution to this complex problem, we must protect the original
purpose of Use Value - to sustain our family farmers and Wisconsin’s
agriculture legacy.
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Contact me in Black River Falls at (715) 284-1730; or in
Madison at (877) 763-6636 (toll free); or write: State Capitol; P.O. Box
7882 Madison, WI 53707-7882 or email
Sen.Vinehout@legis.wisconsin.gov
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