Property Taxes Too High? Make Certain of your Land's Tax Designation
By Susan Alexander

Property taxes are a fact of life in Oregon, and these taxes fund many benefits that we all appreciate. Property taxes on farm and forestland are designed to reflect the way the land is being used. For whatever reason, many of us have not paid much attention to how we can influence the property taxes we pay on farm or forestland. In my case, the death of a parent was what made me sit up, take notice and figure out how the tax system works. I offer this story on how our family re-established tax-deferred status of our family tree farm in hopes that other landowners can learn from our experience.

After my father's death, my mother became responsible for some unfamiliar bills, and she was trying to check their accuracy. She asked me for help with her property tax bills on two tax lots she owns in Clackamas County, Ore., as the taxes on one had increased substantially. The two tax lots-one 70 acres and the other 23 acres-are partly forested and produce farm income from leased farmland, honeybees and pasture rental.

So, I went to see the Clackamas County tax assessor. I learned that the zoning for a tax lot doesn't guarantee the way it is taxed; rather, taxes often depend on how the property is being used. Zoning is based on state statute. Oregon counties have different names for the zones, and forms may differ somewhat, but farm and forest uses are set by statute and there are farmland and forestland zones with the same use designation rules in each county.

In our case, both tax lots are in what is referred to in Clackamas County as General Timber District Zoning. Zoning is not the same as tax designation. After examining what tax designation the two properties were under, I found that the 70-acre piece had 2 acres taxed at market value, and the other 68 acres was in forestland designation. The 23-acre tax lot had been entirely designated as farm use before, but was disqualified in 1995 and was being taxed at market value. The property taxes on this tax lot increased $450 in 1995, and went up another $600 in 1996. My mother noticed. I found out that the "gross income questionnaire for special assessment of farmland" was not filled out in 1995 for the 23-acre tax lot. The use of a questionnaire began in the early 1990s, and some people may have misunderstood its use and thought their land no longer qualified for farm deferral.

The county assessor's office has handouts that describe definitions, requirements and how to apply for designation of land as farmland or as forestland. Since our farmland is not zoned as Exclusive Farm Use (EFU), I filled out an application for special assessment of farmland with income information, as there are income requirements for farmland tax designation outside EFU zoning. EFU designation is set by statute, as are the income requirements for non-EFU farm use. In Oregon, if your land is zoned for exclusive farm use, you have a management requirement. If your land is not zoned for exclusive farm use, but you are farming, you have an income requirement to maintain farm designation for taxation. Part of the income requirement can be met with stock or crops used by the owner for personal consumption. The application for forest tax designation does not have an income requirement, but it does have stocking and species requirements.

The question of how to divide a tax lot into different tax programs must be addressed before any of the applications are filled out. In our case, we knew that the 70-acre tax lot would have 2 acres in farm designation because there is a barn and some pasture there; however, these 2 acres were listed in the assessor's office at market value (not in forest use). The remaining 68 acres is fully stocked with Douglas-fir and hardwoods that qualify it as designated forestland in General Timber District Zoning.

How to handle the smaller 23-acre tax lot was not as clear. We were fortunate to have aerial photos and numerous maps of the parcel, so we could draw a map for the assessor's office that followed our land divisions with roads and buildings sketched in.

Almost 13 acres in the 23-acre tax lot were in forest use. Some of the 13 acres was old pasture we had recently planted with Douglas-fir. The map we sketched of the area included a fish-bearing stream, fences and buildings. Our management plan included the owner's name, total acres in each use, a description of the stocking, and planned tree densities and species for areas not yet planted. The management plan must follow the Oregon Forest Practices Act rules. As part of the management plan, we stated who would be managing the property, and what their qualifications were. We attached the management plan and map to the application for designation of land as forestland and submitted the packet to the assessor's office in early 1997.

At the same time, we also filled out an application for special assessment of farmland. We put 2 acres of the 70-acre tax lot and 8.8 acres of the 23-acre tax lot into farm use designation, and counted the gross income for all farm activities against the income requirement for the total 10.8 acres. With our small honey business, pasture rental and leased farmland, we easily qualified for a farm use designation. This application does not require a map, but you do need to estimate how many acres of the total are in different uses, such as irrigated and non-irrigated cropland, pasture and so on.

The deadlines for the forest designation applications are April 1 for that tax year. Application deadlines and time requirements are on each form. The gross income questionnaire for farmland is also due by April 1. County assessor's offices return a decision in a timely manner, either before July 1 or within three months of filing. Sometimes they must do some extra checking on forest management plans with the state forester.

After submitting our applications, we qualified in 1997 for the combined farm and forestland designations. Property taxes on the 23-acre tax lot dropped by about $1,400. Oregon's Property Tax Measure 50 also took effect that year, which accounts for some of the savings, but a significant annual savings was realized through our efforts to requalify the land after its disqualification in 1995.

Even though we are a family of professional foresters, this experience shows that new policies and family upheavals can throw anyone off. As landowners, it is always a good idea to check your land use designations and tax classifications with the assessor's office. In the end, you may find some unexpected savings.

WHERE TO GO FOR HELP

Your county assessor can provide maps with ownership boundaries and assessment classifications. They have the applications for designation of land as farm and forestland, and can provide information about how to fill them out, as well as what they expect in a management plan.

An extensive collection of maps and aerial photos can be found at the University of Oregon library in the Map and Aerial Photography (MAP) collection. Most must be viewed there. They have a website at libweb.uoregon.edu/map/, and provide links to other sources, such as the USDA Aerial Photography Field Office, National Archives and Records Administration and Microsoft's Terraserver. The WAC Corporation in Eugene has an extensive collection of aerial photos. They sell aerial photos for most of Oregon, Washington and California, and some sites in Arizona, Nevada and Idaho. They can be reached at 1-800-845-8088 or www.waccorp.com. District offices of the USDA Farm Services Agency have aerial photos that can be photocopied.

Oregon Department of Forestry service foresters can help landowners learn about a cost-sharing assistance program for writing stewardship plans, which are more comprehensive than management plans, funded through the state of Oregon. The cost-sharing program funds up to 75 percent of the cost of hiring a consultant to write the plan, which is then reviewed by the state service forester. Landowners with stewardship plans are in a good position to take advantage of the more than 30 grant programs for environmental concerns.

Some Extension offices offer help with management plans in conjunction with the state service foresters.

Other good resources for maps and general information include the USDA Agricultural Farm Services Agency and the U.S. Geological Survey.

Susan Alexander is a natural resource economist with the USDA Forest Service Pacific Northwest Research Station Forestry Sciences Laboratory in Corvallis, Ore. She is also a co-owner of the land described in this article, and a member of the Oregon Small Woodlands Association and Society of American Foresters. She can be reached at salexander@fs.fed.us or 541-750-7417.