These rules are prepared pursuant to the authority vested in the Current Use Advisory Board under 32 V.S.A., Chapter 124, section 1.
PURPOSE
The purpose of the use value appraisal law is to encourage and assist in the maintenance of Vermont's productive agricultural and forest land; to encourage and assist in their conservation and preservation for future productive use and for the protection of natural ecological systems; to prevent the accelerated conversion of these lands to more intensive use by the pressure of property taxation at values incompatible with the productive capacity of the land; to achieve more equitable taxation of undeveloped lands; to encourage and assist in the preservation and enhancement of Vermont's scenic natural resources; and to enable the citizens of Vermont to plan its orderly growth in the face of increasing development pressures in the interest of the public health, safety and welfare.
OVERVIEW
An overview of the procedures by which the statute implements these purposes is as follows. For local property tax purposes, eligible farm and forest land will be appraised by local assessing officials at its use value according to criteria and rules established by the Current Use Advisory Board. The state will reimburse the town for lost property tax revenues resulting from use value appraisals. Such reimbursement is limited to and is dependent upon funds available for this purpose. If land which has been appraised at use value is withdrawn by the owner or determined to be ineligible, it will thereafter be appraised at fair market value. If land which has been appraised at use value is developed, the owner is liable for a land use change tax payable to the State of Vermont, unless the State is unable to reimburse the town for 100% of lost property tax revenues, in which case the owner may withdraw from the program without liability. The land use change tax is calculated as 10% of the fair market value of the developed land as of the time it ceased being appraised at use value.
Rule No.1 Definitions(1) "Agricutural land" means any land, exclusive of housesite(s), which meets any one of the following conditions: (a) It is at least 25 acres, owned by a farmer, and part of the overall farm unit.(b) It is at least 25 acres and used by a farmer as part of his farming operation under a written lease for at least three years.(c) It has produced an annual gross income from the sale of farm crops in one of two, or three of five immediately preceding calender years of at least $ 2,000 for parcels of up to 25 acres, and $ 75 per acre for each acre over 25, with the total income required not to exceed $ 5,000. Exceptions to these income requirements may be made in cases of orchard lands planted to fruit producing trees which are not yet of bearing age. Land less than 25 acres in size can qualify as agricultural land if it meets the requirements of this paragraph.(d) It is at least 25 contiguous acres and in active use to do one or a combination of the following: grow and annually harvest hay or cultivated crops; pasture at least one animal unit per three acres (an animal unit is defined as one horse, one cow, one mule, five goats, or five sheep); cultivate and harvest Christmas trees; cultivate trees to produce an annual crop of edible fruit; or produce an annual maple product.(2) "Annual conformance report" is the report which must be signed by the owner and approved by the State Department of Forests, Parks and Recreation to show that the forest management plan is being complied with by the owner.(3) "Assessing officials" means the listers or other assessing authority of the municipality or the State of Vermont. *(4) "Board" means the Current Use Advisory Board.(5) "Changed land" means that portion of the land which is developed as defined in Rule 1(8). If development is a subdivision, "changed land" means only those resulting parcels containing less than 25 acres. If the development is a single family dwelling on land appraised at use value, the "changed land" shall be two acres. If any other type of development occurs on land appraised at use value, the Director of the Division of Property Valuation and Review shall determine the size of the "changed land." If land is developed after it has been withdrawn from or is no longer eligible for use value appraisal, the "changed land" shall be, as a minimum, that amount of land needed to meet town or state requirements for the development in question. If there are no state or town requirements which apply, the "changed land" shall be determined by the Director of the Division of Property Valuation and Review, unless the development is a single family dwelling, in which case the "changed land" shall be two acres.
(6) "Commissioner" means the Commissioner of the Department of Taxes. *(7) "Common level of appraisal" means the ratio of the total appraised value of all taxable property in the town to the total fair market value of such property.(8) "Development" means the construction of any buildings, road or other structure, or the commencement of any commercial mining, excavation or landfill activity. "Development" also means the subdivision of a parcel of land into two or more parcels, regardless of whether a change in use actually occurs, where one or more of the resulting parcels contains less than 25 acres. "Development" also means the cutting of timber in a manner contrary to the required forest management plan, or contrary to the minimum acceptable standards for forest management. The term "development" shall not include the construction, reconstruction, structural alteration, relocation or enlargement of any building, road or structure for farming, logging, or forestry purposes, but shall include the subsequent commencement of a use of that building, road or structure for other than farming, logging or forestry purposes.(9) "Director" means the Director of the Division of Property Valuation and Review.(10) "Farm unit" means land, owned by a farmer, which is 25 acres or more in size, not including housesite(s) and land used for purposes other than farming or forestry.(11) "Farmer" means any individual, partnership or corporation owning agricultural land who earns at least one-half of his annual gross income from the business of farming as farming is defined in Regulation 1. 175-3 issued under the Internal Revenue Code of 1954.(12) "Forest Management Plan" is a plan, approved by the Department of Forests, Parks and Recreation, which provides for continued forest crop production on the eligible land for the next succeeding ten years. Except as specifically provided in Rule 2(b) for a farm unit, it shall be reinstated each year thereafter and filed with the clerk of the municipality in such a manner and in such form as is prescribed by the Department of Forests, Parks and Recreation.(13) "Housesite" means the two acres of land surrounding any house, mobile home or dwelling. *(14) "Land use change tax" means the tax due when and if land which is, or has been appraised at use value is developed. The amount of the tax is 10% of the fair market value of the changed land at the time it was withdrawn from or was no longer eligible for use value appraisal. The determination of the fair market value of the changed land shall be made by the Director.(15) "Managed forest land" means any land which is at least 25 contiguous acres in size, exclusive of housesite(s), which is under a recorded forest management plan for the purpose of harvesting repeated forest crops in accordance with minimum acceptable standards for forest management. Land which is not capable of growing 20 cubic feet per acre per year plus open land not to be restocked within two years under the provisions of a forest management plan cannot exceed 20% of the total eligible forest land appraised at use value.(16) "Minimum acceptable standards for forest management" refers to certain standards established by the commissioner of the Department of Forests, Parks and Recreation. *(17) "Owner" means the person who is the owner of record of any land. *(18) "Parcel" means all contiguous land in the same ownership regardless of the number of deeds.(19) "Person" means any individual, firm, corporation, partnership or other form of organization or group of individuals. * * statutory definition
(20) "Use value appraisal" means the price per acre which the land would command if it were required to remain henceforth in agriculture or forest use, as determined by the Current Use Advisory Board.Rule No.2 Eligibility Requirements(A) Managed forest land is eligible for use value appraisal if: 1. It is subject to a forest management plan to provide for continued forest crop production according to minimum acceptable standards for forest management. The plan must always cover at least the next ten years. It must be approved by the Department of Forests, Parks and Recreation and filed with the town clerk; and2. An annual report of conformance with the plan, signed by the owner and approved by the Department of Forests, Parks and Recreation and has been filed with the town clerk by March 1 of each year; and3. An adverse inspection report has not been filed with the town clerk. The adverse inspection report would be filed by the Department of Forests, Parks and Recreation, if, during inspection which is required to occur al least once every five years, it was determined that the management of the tract was contrary to the plan or to the standards. Discussion: The law specifies that the forest management plan must be complied with by the owner. The Board recognizes that it may be difficult to follow the schedule in the plan. An owner who is not able to perform the management activities prescribed for a given year due to unforseen circumstances beyond his control, such as market conditions, unavailability of loggers, etc., should stipulate such in the annual conformance report and approval by the Department of Forests, Parks and Recreation may still be possible.
If an owner neglects to perform the management activities prescribed by the plan, and fails to receive approval by the Department of Forests, Parks and Recreation, the land will become ineligible for use value appraisal, and will then be appraised at fair market value. No land use change tax would be due unless and until the parcel is developed. However, if an owner cuts in a manner contrary to the management plan or contrary to the minimum acceptable standards for forest management, that portion of the land would be considered developed, and subject to the land use change tax, and the entire parcel would be ineligible for use value appraisal for at least 5 years.
(B) Agricultural land is eligible for use value appraisal. Forest land which is part of a farm unit is eligible as agricultural land, but it shall be appraised according to the correct forest land site class categories. Sugarbush land may be considered either forest land or agricultural land for eligibility purposes, but it shall be appraised according to the correct forest land site categories. If the forest land included in the farm unit is less than 25 acres, it shall be eligibile for use value appraisal without a management plan. Discussion: If the applicant is a farmer, the entire farm unit is eligible for use value appraisal. A farmer would be able to enter up to 25 acres of forest land into use value appraisal without a forest management plan. However, in filling out the application form, the forest land should be placed in the appropriate forest categories so that the correct forest use values can be determined.
(C) A tract of qualifying land shall be considered contiguous for the purpose of determining eligibility for use value appraisal even though divided by a right-of-way, highway or town line.(D) Housesite(s) and buildings and any land not appraised at use value shall be appraised at fair market value.(E) Land used in connection with any structure or improvement for a commercial enterprise not directly related to the forestry or farming management of the parcel appraised at use value, and land used in connection with the removal of soil, gravel, stone or other minerals for commercial purposes, shall not be eligible for use value appraisal.(F) Land can be appraised at use value as long as the eligibility requirements are met even though such land is transferred or otherwise conveyed.(G) If a parcel has been removed from use value appraisal but has not been developed and no adverse inspection report has been filed, a new application may be considered by the next filing date. If a parcel has been removed from use value appraisal due to an adverse inspection report, a new application will not be considered for 5 years. At that time the application and management plan will only be approved if a conformance report has been filed certifying that appropriate measures have been taken to bring the parcel into compliance with the standards.
Rule No.3 Application Procedure(A) Application date - The owner of land which is eligible for use value appraisal who wishes to qualify that land must apply for use value appraisal to the assessing officials of the town on which the land is located on or before March of the tax year for which the application is made, on forms available at the town clerk's offices. The owner bears the burden of proof as to qualification for current use appraisal and shall furnish such documents as are requested by the assessing officials. A separate application must be filed for each qualifying parcel.(B) Maps - Initial application for use value appraisal must be accompanied by a map (8 1/2" x 11" or folded to that size) of the parcel, adequately identified and oriented to establish its location and sufficiently accurate to permit estimation of acreages. The map shall also show the boundaries and acreage of the entire parcel, and of the portion to be appraised at use ualue, the map shall show the boundaries and acreage of land falling within various forest site classes and/or agricultural productivity or use classes for which the owner is seeking qualification.(C) Notification of acceptance or rejection by assessing officials - The assessing officials shall notify the owner, no later than the date the abstract of the individual lists is lodged in the town clerk's office, of their decision on eligibility of the parcel of land for use value appraisal. Notification shall be in person or by mailing and obtaining a certificate of mailing. The notification shall contain the preceding grand list appraisal, the new grand list appraisal and the use value appraisal.(D) Notification of acceptance by owner - If the application is approved by the assessing officials, the owner, to qualify the property or use value appraisal, must sign the application form and return it to the assessing officials within 14 days of the date of mailing of the application. Discussion: It is intended that an owner will recieve notification of the parcel's new grand list appraisal and its new use value appraisal so that the owner will be able to compare the two appraisal values before deciding to enter the program.
(E) Notice of use value appraisal to be recorded in the land records - If land is appraised at use value and that value is accepted by the owner, copies of the completed application form shall be filed as follows: one copy shall be retained by the owner, one copy shall be sent to the Director and one copy shall be sent to the clerk of the municipality to be recorded in the land records. The copy recorded in the land records shall become a permanent part of the deed record for the eligible parcel and shall constitute a lien to secure payment of the land use change tax to the State of Vermont upon development of the parcel. The lien shall be discharged of record upon payment of the land use change tax. A partial discharge of the lien shall be record upon partial payment of the tax (for example, if only a portion of land appraised at use value is developed). All costs of recording shall be borne by the owner.Rule No.4 Withdrawal from Use Value Appraisal (A) The owner may withdraw land from use value appraisal at any time. Upon withdrawing land from use value appraisal, the owner must request the Director to determine the fair market value of such land. The fair market value of the land shall be determined as of the date the land is withdrawn from use value appraisal. This value, once determined, shall be the base on which the 10 percent land use change tax shall be calculated when and if the withdrawn land is developed. Once land has been withdrawn from use value appraisal, it shall, for all subsequent tax years, be appraised at its fair market value.
Rule No.5 Use Values The Board shall establish the use values and the criteria and rules necessary to administer the use value appraisals. The Board shall hold a public hearing annually in September to review the criteria, rules and values for that year. If there are any changes from the preceding year, the Board shall notify the Director by February 15 and the Director shall then distribute the changes to all municipalities.
Rule No.6 Land Use Change Tax Land which has been appraised at use value shall be subject to a land use change tax upon development. The amount of the tax shall be ten percent of the fair market value of the changed land at the time it was withdrawn from, or became ineligible for, use value appraisal. If and when the land is developed, the tax shall be due the next April 1. In the event that the changed land is a portion of a larger parcel, of which the fair market value was determined at the time the parcel was removed from use value appraisal, the land use change tax shall be based on the contributory value of the changed portion only. Contributory values of portions shall not exceed the total fair market value established when the parcel was removed from use value appraisal. The contributory value shall be established by the Director at the time of development.
Discussion: The rules do not preclude a farmer from building a house for someone who is employed a minimum of forty hours a week on the farm. As long as the occupant is employed on the farm, the two acre housesite would be appraised at fair market value, but the land use change tax would not be due. If or when the occupant is not employed on the farm, then the land use change tax would be due on the two acre housesite.
The following examples of development and the resulting land use change tax will be used to illustrate the intent of Rule 6.
(1) An owner has 180 acres appraised at use value. He builds a house on the land, and the minimum town zonimg is 5 acres. The land use change tax would be based only on the value of the 2 acre housesite, without regard to town zoning, if the remaining 178 acres are appraised at use value.(2) An owner has 180 acres appraised at use value. The land is then withdrawn or is no longer eligible for use value appraisal. The Director determines the fair market value of the 180 acres as of th date it was withdrawn or ceased receiving use value appraisal. The owner later builds a house on the property and th minimum zoning in the town is 5 acres. The land use change tax would be based on the fair market value of the 5 acres. The Director would determine the fair market value of the 5 acres as of the date the 180 acre parcel was withdrawn or ceased receiving use value appraisal. The fair market value of the 5 acres, as established, will constitute the contributory value of the 5 acres to the fair market value of the 180 acres.(3) An owner has 30 acres appraised at use value. He then sells 10 acres. The land use change tax would be due on the entire 30 acres as the subdivision has resulted in two parcels which are both less than 25 acres.(4) An owner has 30 acres appraised at use value. He withdraws the land from or is no longer eligible for use value appraisal and then builds a house. The minimum town zoning is 10 acres. The land use change tax would be due on the 10 acres. It would not be due on the entire 30 acres as in (3) above because no subdivision has occurred.(5) An owner has 40 acres appraised at use value. He then withdraws the land from or is no longer eligible for use value appraisal and then sells 10 acres. The land use change tax would be on the 10 acres as the parcel developed is less than 25 acres. The owner would not pay a penalty on the resulting 30 acre parcel as it is more than 25 acres in size.Rule No.7 Appeals(A) If the assessing officials deny in whole or in part any application for classification as agricultural land or managed forest land, or grant a different classification than that applied for, or fix an erroneous use value appraisal for eligible land, or determine that previously classified lands are no longer eligible or that lands have undergone a change in use, the aggrieved owner may appeal the decision in accordance with the provisions set forth in Chapter 131 of Title 32, V.S.A. Said appeal shall be heard in the same manner and under the same procedures as other appeals relating to real property appraisals and taxation.(B) The Director may review all applications approved by the assessing officials to determine if the parcel is eligible for use value appraisal, of the use values initially set by the assessing officials are below the use values as established by the Board, or if the fair market value is above the fair market value at the common level of appraisal in the town. The Director may declare the parcel to be ineligible, or he may substitute his estimate of the use value appraisal or the fair market value for that of the assessing officials. The assessing officials and the owner shall be notified by registered or cetified mail, return receipt requested, of any such changes no later than 30 days from the date of notification by the assessing officials to the Director. Any owner of any assessing official who is aggrieved by the decision of the Director may appeal the decision in the same manner and under the same procedures as an appeal from a decision of a board of civil authority, as set forth in Subchapter 2 of Chapter 131, of Title 32, V.S.A.(C) Whenever a municipal legislative body denies a request for an exemption from the terms of the definition of a "farmer" as provided in the law, the aggrieved person may appeal the decision in accordance with the provisions set forth in Chapter 131 of Title 32, V.S.A. Statutory Authority: 32 V.S.A. Chapter 124 § 110-001 Code Vt. R. 10-062-001-X
Effective: 1/12/85 (Secretary of State Rule Log # 84-70)