Developers find Green Acres program is the place to be

Minnesota's 40-year experiment with protecting farmers on the urban fringe has silently spiralled into a vast tax-avoidance scheme that shelters $10 billion worth of land in ways that almost certainly are unintended and unfair - while doing little in the end to truly preserve farmland, the Legislative Auditor reported Friday.

The state agencies responsible for taxation and agriculture both endorsed the findings, saying they hope the report becomes a catalyst for long-needed change. And one legislator asked openly whether Green Acres and two other similar programs should simply be scrapped.

But a legislator who farms just outside the suburbanized edge of the Twin Cities area said she fears that an ill-thought-out reform will hurt the people the law is meant to protect.

"This law does help people continue to farm," said Sen. Claire Robling, a Republican who lives in a rural township near Jordan, in Scott County. "We could easily run them off the land if we tax them at the value of someone who is selling that land for houses."

However, Legislative Auditor James Nobles reported that in practice, the law winds up giving a huge tax break to developers who are holding land strictly for future subdivisions and Taco Bells.

Several parcels in Washington and Wright counties "ranging in value from $300,000 to more than $5 million ... are owned by land developers or others outside farming who pay one-tenth or less of what their taxes would be without the Green Acres Program," wrote Jody Hauer, the report's main author.

"For a 38-acre parcel valued at $2.7 million, the Green Acres Program reduced the property taxes from $12,928 to $570. Similarly, for a 26-acre parcel valued at $816,000, Green Acres reduced the property taxes from $3,378 to $340."

To some extent, that's fine, the report says. The law was meant to protect farmers who happen to be located near fast-developing areas from being pushed off their farms merely because their values and taxes are rising, even though they intend to keep farming far into the future.

How much of it is questionable is hard to pin down because the line between what's truly agricultural and what is just acreage is hard to set. If someone owns a lake home surrounded by 10 acres of grasses mown by a neighboring farmer for hay, is that a farm?

One red flag, though, the auditor says: Thirty-eight percent of Green Acres land isn't tillable.

Sen. David Hann, R-Eden Prairie, put one fundamental question to the ag department's Robert Patton during Friday's hearing on the report: Does it makes sense for the government to intervene in the market to preserve farmland? "Do we have enough?"

"That's a complex question," Patton said, with opinion on both sides, but "some ag folks say we have plenty." Movement for change is underway, he said. A Green Acres committee is meeting to discuss one bugaboo raised by the report, namely inconsistency between counties. "And we're inviting ag groups in for input in a couple of weeks."

"We can only do so much," he said, when the question of what's truly farming is so hazy.

"I hope," he said, "this report will be a catalyst for change."