Bill to repeal new conservation easement law is on life support

St. Paul — Despite a setback, legislators still hope to reinstate the incentives for conservation easements.

Last year, northern Minnesota state Sen. Rod Skoe, DFL-Clearbrook, and chair of the Senate Tax Committee, sponsored a bill that largely did away with the lowered property tax assessments that previously came with conservation easements.

The change made Minnesota the only state to do so, according to John Curry, associate director of the Minnesota Land Trust, which, among its various efforts, assists private landowners in preservation through the use of conservation easements.

“We’re hoping this is just a one-year detour into bad policy,” Curry said.

But bills in both the House and Senate to repeal the law have yet to gain traction despite support on both sides of the aisle.

“It increases the tax burden on farmers,” said Kelby Woodard, a Republican from Belle Plaine, who co-sponsored a bill initially authored by Paul Torkelson, a Republican from Hanska. “They would be taxed as if they are using the land as farmland. It makes no sense and incentivizes them to put land into production instead of conservation.”

Woodard said he was disappointed that Torkelson’s bill was not included in the House tax committee’s division report.

“The bill is not dead, but it’s kind of wounded at the moment,” said Woodard, whose hope now is for it to get passed via amendment from the House floor. “If it were up to the rural legislators on both sides of the aisle, I think we’d have this thing done. Agriculture likes this, environmentalists like this, and hunters like this, but I think we’re getting hung up by the DFLers in the Twin Cities.”

The change in law, affecting easements that were closed after May 23, 2013 (previous easements are grandfathered and exempt), comes at time with 100,000 to 200,000 of acres in Minnesota expiring annually from the federal Conservation Reserve Program, said Bill Penning of the Minnesota Board of Water and Soil Resources. That’s land that would be targeted for conservation easements but is now less likely to attract landowners.

“There could be a significant number of missed opportunities,” Penning said. “Some landowners are not signing up for easements because of this tax issue that may have otherwise signed up.”

Joe Pavelko, director of conservation for Pheasants Forever, said the Minnesota-based conservation organization, though not directly affected by the new rule, is opposed to it. Pheasants Forever generally works on larger-scale land acquisitions that bring land into public ownership.

“We’re opposed to anything that would prevent people from participating in conservation,” Pavelko said. “While we don’t do easements, we want and need conservation on public and private land.”

Curry said it’s hard to gauge how much of an effect the law is having, since there’s no way to track how many landowners have decided not to call.

“Some folks are calling us and looking into (the easements) and backing off, hoping to try again at a better time, but they may never call us again,” Curry said.

Penning said the University of Minnesota-Twin Cities professors Michael Kilgore and Steven Taff have been contracted to research the possible effects of the new law.

It appears, Penning said, that the law will have a lesser impact in the northern parts of the state, where land values are lower than in areas where the high prices of corn and soybeans have driven up the value of agricultural lands.

While the law has the potential to sway landowners from putting more land into conservation easements, it’s probably going to have a minimal impact on overall tax generation, since it would only be applied to new easements, Penning said.

And Penning said he is worried that the law might even scare off some landowners unaware that the Reinvest in Minnesota Reserve program easements for water quality purposes have been exempted from the new law.

“I don’t know if that part is widely understood by the public,” Penning said.

Regardless, the law needs to be repealed, Penning said.

“The longer we wait for it to be fixed, the bigger the problem it’s going to be,” he said.

Woodard said if the law isn’t repealed in this session, the opposition will build.

“If we don’t repeal it this year, I am confident it will be next year,” he said. “This would have a longer term effect at that point, and will allow us to have an even louder voice at the Capitol.”

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