Proposed "Blue Waters" Bill
So-called Blue Waters legislation has been part of MSRPO's
legislative agenda almost since our inception, but so far
has not become law. The idea behind the bill is that land
owners who wish to leave their lakeshore land in its natural
state should receive incentives to do so.
Over development of lakeshore is a major source of water
pollution
The Department of Natural resources states that one of
the main causes of surface water pollution in the state
is the over development of lakeshore.
The Minnesota Pollution Control Agency has determined,
that on average, a reduction of water clarity of one meter
visibility will suppress the property values of that lake's
shoreline on average about $25 per front foot. On large
lakes, this translates into millions, or even billions
of lost tax capacity.
Currently excessively high lakeshore property taxes force
over development of lakeshore. The Blue Waters bill will
partially solve this problem.
So far Blue Waters legislation has
failed to pass both houses of the legislature. MSRPO continues
to promote passage of this important
bill to protect natural resources.
Language in the proposed bill
This article
establishes a new property class for certain unimproved
real estate
bordering
certain
public
waters.
The new class 2c has a class rate of 0.8 percent of market
value if certain criteria are met. Under current law
the class rate on this property is usually 1.0 percent
or 1.25
percent, depending upon ownership.
The owner must sign a covenant agreeing to keep the land
in its undeveloped state for the duration of the covenant.
The property owner may terminate the covenant, but needs
to give an 8-year notice of termination. The covenant language
is similar to the covenant on property enrolled in the
Metropolitan Agricultural Preserve Program, Chapter 473H.
Upon termination of the covenant, the land will no longer
qualify for the deferral and additional taxes are due for
the last 7 years that the property was valued and assessed
as class 2c property.
Effective for the 2005 assessment, taxes payable in 2006,
and thereafter.
Class 2c undeveloped lakeshore. Provides a
new class 2c for certain unimproved real estate, excluding
agricultural
land, which meets all the criteria in clauses (1)
to (5). Class 2c has a class rate of 0.8 percent. They
are:
(1) the property consists of at least 200
contiguous feet of unimproved real estate that borders
a "meandered
lake" as defined under section 103G.005, subdivision
15, paragraph (a), clause (3);
(2) the unimproved real estate is located
within 400 feet of the ordinary high water elevation of
the water. "Unimproved" means
that the property or portion of property qualifying contains
no structures, no docks or landings on its shoreline,
natural terrain and vegetation has not been disturbed,
or has been
restored to native vegetation;
(3) the property is either (i) the homestead of the owner,
the owner's spouse, or the owner's or spouse's son or daughter;
or (ii) has been in one of their possessions for at least
seven years prior to application for benefits;
(4) the owner of the property files an application by
July 1 with the county assessor for classification for
the subsequent year's assessment; and
(5) the owner of the property signs a covenant agreement
and files the covenant with the county assessor in the
county where the property is located. The covenant agreement
must include all of the following:
(i) legal description of the area included in the covenant;
(ii) name and address of the owner;
(iii) a statement that the land described in the covenant
must be kept as undeveloped land for the length of the
covenant;
(iv) a statement that the landowner may initiate expiration
of the covenant agreement by notifying the county assessor.
The date of expiration must be at least 8 years from the
date of the expiration notice;
(v) a statement that the covenant is binding on the owner
or owner's successor or assignee, and runs with the land;
and
(vi) a witnessed signature of the owner covenanting to
keep the land in its undeveloped state as it existed on
the date of the covenant was signed.
Upon expiration of the covenant, additional taxes are
due. The amount of additional taxes due equals the difference
between the taxes actually imposed on the property and
the taxes that would have been imposed for the last seven
years if the property had been valued and assessed if class
2c did not apply. No interest and penalties are levied
on the additional taxes if timely paid. The tax imposed
is a lien on the property to the same extent as other real
property taxes.
Effective date. This section is effective for the 2005
assessment and thereafter, taxes payable in 2006 and thereafter.
