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All members of MSRPO receive our newsletter chock full of news you can use. Learn more about issues that affect your recreational property and how MSRPO is using your membership dollars to carry our fight to the legislature.

In the latest issue you could read about:

  • Legislative accomplishments in 2010.
  • Vacation home rentals and why it is an issue now.
  • Strategies for passing along your property to your heirs (without forcing them to sell).
  • The fight against Aquatic Invasive Species!


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MSRPO Update 2011

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Past Issues:
MSRPO Update 2010
 MSRPO Update 2009
 MSRPO Update 2008
 MSRPO Update 2007
 MSRPO Update 2006
 MSRPO Update 2005

All members of MSRPO-regardless of how much or how little they can contribute-receive the newsletter, and brief "Email Blasts" that alert you to events in your area, bills that have reached a critical stage in the legislature, and advice you can't afford to miss.

The newsletter is one more powerful reason to join MSRPO today. Why not check out all the other reasons why a membership in MSRPO makes sense.

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Annual Meeting Highlights - 2007

This year's 2007 Annual Meeting looked at the Environmental Consequences of our current Property Tax System, particularly as it relates to the growing concern over global climate change.

The guest speaker was John Stetson, a team member of Will Steger's polar expeditions, and John gave a compelling presentation of the changes he has seen in his 30 plus years of polar exploration, and what these future changes will mean to Minnesota's environment.

Here are some excerpts from the presentation Executive Director Jeff
Forester gave at the annual meeting:

Seasonal property owners are in crisis - the land they own is in crisis:

* Insects infestations have damaged millions of acres of forests….
* Extreme wind events have taken a huge toll on owners and the land.
* After a century of fire suppression, and resulting fuel build up, combined with insects and wind-throw and drought, wild fires have been getting larger and more destructive.
* And development has been accelerating, driving up property taxes and fragmenting forests, particularly on industrial forests. This will put
ever increasing pressure on family forest owners to provide benefits and leadership in the stewardship of Minnesota's forests.

The Blandin Foundation and the Bell Natural History Museum put together an excellent series on the history of Minnesota. Here is an excerpt that explores the development crisis in the Lake Country. Here is a link to an excellent video that was shown at the meeting that looks at the issue of Forest Fragmentation. Property taxes are the driving force behind this problem: Check out the University of Minnesota's Bell Natural History Museum video at this website.

Minnesota is one degree warmer than it was in the 1920s. Climatologists predict at least another three degree rise in the next century, perhaps as much as ten or twelve degrees.

This change will cause major ecological shifts. Since seasonal owners steward the majority of the forest in the state, the burden to adapt and manage these changes will fall disproportionately on them.

Water Quality is also on everyone's mind -

Research in New York, Maine, Wisconsin and Minnesota have all shown that people will pay much more for land adjacent to pristine waters. On large lakes like Leech, managing the water quality is worth billions. For a one foot decrease in water clarity, the value of a front foot of shoreline can drop by as much as $250.

Limnologists have determined that phosphorous is the main culprit - and once again, research shows that it is the choices the seasonal owners make that can have the biggest impact on water quality in Minnesota.

Is it wise to have a tax system that forces them to make decisions that
damage this resource?

There has been a watershed shift in just the last few years. Word has
gotten out.

In 1994, the year MSRPO started, I was living in Ely working on research for my book Forest for the Trees: How Humans Shaped the Northwoods.

I realized that the ad valorem tax had a huge impact on the viability of
sustainable forestry. In 1895, as conservation was just getting off the
ground, Minnesota passed the Forest Auxiliary Act The law stated that….This tax forfeiture land became National Forests, and was lost to the tax base forever.

Other organizations, thirty of them in fact from a broad coalition of
advocacy groups, forestry associations, government groups and environmental groups, have come to the same conclusion, and have signed on with legislation to help correct this problem. The ad valorem tax is broken, and provides strong incentives that run contrary to the larger public good.

Here is what we know - seasonal owners are the largest forest ownership block in the state, they do not want to sell their land, and have owned it for a remarkable 25 years on average, yet they are selling. Their land is being subdivided and developed.

MSRPO must continue to spread this connection to other groups, to lake associations, soil and water conservation districts, county boards,
legislators. Blandin has put together a powerful force to this end, and we are very, very grateful for their work, and honored to be a part of it..

Our long term goal is to completely rewrite the ad valorem tax.

The first phase of conservation work was in the early twentieth century. Almost fifty years ago people realized the value of wilderness land. And now it is WE that will carry on the critical work of the Twenty First Century.

Our strategy has worked in the past, and it will work in the future. And we will be providing you with good tools to help in this work. All of them are available on our web site, which remains an evolving work in progress.

Here is our latest tool. I try to speak at as many lake associations as
possible, but there are dozens of meetings every weekend. I cannot get to them all. So we have created a DVD that members can use to help them spread the word. It will play on any DVD player or computer with a DVD reader. We can send a disc, or you can download it from our web site.

And now I'd like to introduce John Stetson.

 

Legislative Session Update - 2008

2008 Legislative Achievements

The session started with a $1 billion deficit, and so there was no chance for any reform that was not revenue neutral.

Still, we did accomplish some significant progress.

Rural Vacant Land Classification - Class 2b - Managed Forest Class 2c
Qualifying land -2b
rural vacant land -unplatted, not used for ag. - ancillary non residential buildings okay
- at least 20 acres
- can split classify, keeping at least 10 acres with residential structure, and at least 20 acres in the new class 2b

- Benefits
- Land removed from State General Tax
- Class 2b supercedes the "Highest and Best Use" principle of land assessment - must be assessed as rural vacant land even if it is adjacent to water, or in a high recreational use area for instance.

Qualifying land-2c Manages Forest Land
At least 20 acres, no more that 1,920 acres
Managed under a forest management plan under 290C but not enrolled in the Sustainable Forest Resource Management Incentive Program (SFI)
Must apply annually to the assessor to receive the reduced class rate and DNR must certify annually that the land qualifies
Class rate is .65
Exempt from state general tax

Assessment Practice Changes
MSRPO has long argued that assessment practices are discriminatory, the meetings are held when most people cannot attend, and we have no recourse with capricious assessment practices.

Changes to Assessment Practices

Now, the commissioner of Revenue is required to review the assessment practices in a taxing district I requested in writing by the greater of:
Ten percent of the registered voters
Five property owners
It also requires the commissioner to report the findings to the taxing jurisdiction and to the property owner designated in the request.

County Board of Review Notices
New language allows county boards of review to conduct meetings of Saturdays. It will also require counties that conduct either regular board meetings or open book meetings to hold at least one meeting each year that does not end before 7pm. Additionally it requires counties that require taxpayer appointments to include some available times that extend until al least 7pm.

Valuation Notices
Requires the valuation notice to provide information about the availability of data used by the assessor to determine the value or property, including the location of the information, the times when those locations are open to the public, and the counties website.

Taxation of Leased Lands
Progress was achieved however modestly on the taxation of lease lands. St. Louis County can continue is practice of assessing only the structure and not the land, unlike the other counties that continue to assess the full value of land and the structure.

Bills that did not pass -
1) Proposal to regulate the renting of cabins and hunting lands.
2) Inclusion of seasonal on excess operating levies, including a look back period that would have included the levies passed while seasonal was not eligible.
3) Regulation of Docks, new rules will have public input through the DNR rulemaking process
4) House plan to take away your ability to deduct your property taxes from your income tax.



MSRPO Annual Meeting RECAP 2008

Almost 100 MSRPO members made it to the meeting, even though the final Presidential debate was airing that night.

It was a great meeting with lots of good information from Sen. Tom Bakk, who applauded our grass roots efforts, noting that we had made progress despite a number of record deficit years.

MSRPO member Frank Heers made a very informative presentation on legacy issues, offering a number of good sense solutions on how to transfer seasonal property from one generation to the next while avoiding personality issues, money troubles, and negative tax outcomes.

If you missed the meeting, no worries - HERE is a link to a video of the proceedings.

 

Legislative Session Update - 2009

With the deficit projections growing larger every day, most of our work has been defensive this year. Still we have made some headway - MSRPO has long argued that a home is a home, and tried to extend many of the buy-downs and programs for Homestead Property to Seasonal Property. This session both the House and the Senate are moving bills that would extend a form of the Tax Deferral Program enjoyed by homesteads to seasonal. In this economy, with dividend income so far down, and many long time owners afraid that they will have to sell into a glutted real estate market, this bill will provide some real relief for those in the worst situation.

Here is an updated list of just some of the bills that are in play this session that could impact Seasonal Recreational Property.

S.F. 1767 Saxhaug/Bakk/Skoe
Property tax exemption for leased seasonal-recreational land provision modification.
link

Currently, people who have a special use permit to keep a highly regulated cabin on National forest Land are taxed twice. The US Forest Service is in the process of re-assessing the value of these properties, and will then charge 5% oif that value as an annual permit fee. A portion of the fees collected are returned to Minnesota as Payments in Lieu of taxes (P.I.L.T.) payments. Then, Minnesota also taxes these people as if they owned the land, which they do not. From a fairness standpoint, this is one of the most egregious abuses of our current property tax code, and SF 1767 corrects it.

HF 99/SF240 Atkins/Metzen
Minnesota Land Conservation Property Tax Law created
link

Perhaps one of the most exciting bills with potential cabin benefits in recent years.

The bill has already had two hearings in the senate and awaits action in the tax committee. A hearing has been scheduled in the house.

HF 338/SF 442 Kalin/Erickson Ropes
Minnesota agricultural property tax law modified, and new property tax law classification established for preservation and legacy land.
link

Similar in nature to the legislation above, however less desirable overall.

HF 332/SF 314
Nornes/Skogen
Signature requirement increased for an election to revoke an operating referendum.
link

Requires qualified voters in excess of 30 percent instead of 15 percent of registered voters in a district to sign a petition to place a question before the voters on revoking or reducing an operating referendum.

HF 511
Marquart
Seasonal recreational property tax deferral program provided, and money appropriated.
link

Senator Scott Dibble is carrying this bill in the Senate - S.F. 1348 - link

HF 1261
Dittrich
State Property Tax System Benchmarks
link

This bill is the result of the subcommittee groups work on property taxes.

HF 1072/SF 894
Howes/Skogen
Vacation Home Rental Regulation
link

This is the result of the Vacation Home Rental study conducted by Explore MN over the summer. MSRPO served on this study group. Our position has been that if a property was bought as a business, then it should be treated like a business. But the cabin or hunting land owner who only occasionally rents out their place should be held harmless.

The recommendations that came out of the study group would regulate cabins and other properties through the MN Dept. of Health code for anyone who advertised or held out to the public their property for rent. We originally objected to the results of the study and it appears as if the bill is in serious trouble after our lobbying efforts and those of other affected parties.

SF 1054
Bakk
Levy limit abolishment
link

Essentially this bill would repeal the levy limits that were agree upon in last years tax bill for local units. There are other bills that have been introduced to adjust certain provisions on levies. Most relate to exemptions for reductions in certain aid to school districts and counties.

SF 130/HF 693
Olson/Ward
School district referendum market base alteration
link

This bill puts cabins back on the operating levy for schools while removing us from the state general tax.

MSRPO Has also spent a lot of energy this session talking to legislators about the Statewide Conservation and Preservation Plan - http://environment.umn.edu/scpp/

This plan was created over a three year period at the request of the Legislative-Citizen Commission on Minnesota Resources, (LCCMR). It is a comprehensive look at Minnesota's natural resources, and makes specific recommendations on how to best preserve or restore them. Two major areas of concern where the loss of shoreline habitat due to development and the resulting destruction of water quality.

Another area of concern was the fragmentation of forest land. The plan recognizes what MSRPO has long known - much of this destruction is due to our Property tax Code, and the plan recommends using incentives as a tool.

MSRPO Exec. Dir. Jeff Forester gave testimony to the full Cultural and Outdoor Resources Finance Division - the Committee that will ultimately decide how to spend the money raised from the 3/8th% sales tax passed by Minnesota voters last fall.



MARCH 13, 2009

TO: Members of the House of Representatives Committee on Cultural and Outdoor Heritage

From: Jeff Forester, Minnesota Seasonal recreational Property Owners

Re: Vision and Expectations of Minnesota's Seasonal recreational Property Owners

I would like to thank the Committee for so vigorously pursuing public input in this process, and for keeping the Minnesota Conservation and Preservation Plan off the shelf and on the table. Minnesotan's voted for clean water, habitat and healthy ecosystems, an d the Minnesota Conservation and Preservation Plan lays out the most comprehensive plan for accomplishing these goals.

I think the Constitutional Amendment Investment Goals adopted by this committee on March 10th create an excellent framework for implementing the statewide plan.

And thank you for the opportunity to try to outline where the "vision and goals" of MSRPO's six thousand, seasonal owners. Minnesota's roughly 122,000 seasonal property owners, and how these goals and our vision overlap with the Minnesota Statewide and Preservation Plan. It is an excellent plan, and represents the best thinking of the brightest minds, it comes at a time when the voters of Minnesota have made a strong move towards restoration and preservation of our environment, and so we are encouraged to see this committee utilizing the plan as they make these critical choices.

Both MSRPO and the Plan recognize that no how big the endowment from the constitutional amendment, we will never have enough money to buy all the land we need to preserve our lakes, forests, wetlands and prairies. The alternative the plan offers is incentives.

Incentives are a crucial tool to achieve environmental goals, and they will work more quickly and be cheaper than buying habitat or passing regulations.

In 2005 MSRPO hired an independent firm to conduct some research of who Minnesota's Seasonal Property Owners are, and what they want to do with their property. At about the same time Forest Service researcher Brett Butler conducted a similar study on a nation wide level, and both confirm the value of incentives. Here is what both studies concluded:

About 86% of seasonal owners in Minnesota do not want to sell their land. They view their seasonal lands - forests and lakeshores as legacy heirlooms, not assets. They have owned it, on average, 25 years, a longer period than any other state in the Upper Midwest. Minnesota is blessed with a vigorous and committed "cabin culture" and these people are the stewards of Minnesota's forests and lakeshores.

Families are the largest forest ownership block in the state, stewarding more land than the Forest Service or the DNR, the tribes or even the timber industry.

But many of these owners are in crisis - the land they own is in crisis:

  • Insect infestations have damaged millions of acres of forests...
  • Extreme wind events have taken a huge toll on owners and the land.
  • After a century of fire suppression, and resulting fuel build up, combined with insects and wind-throw and drought, wild fires have been getting larger and more destructive.
  • The phase out of limited market value, which happened simultaneously with the false market bubble created double or even triple digit property tax increases every year since 2001. Owners who paid hundreds of dollars in property taxes in the 1990s now find themselves paying many thousands.

There is ever increasing pressure on family forest owners to provide benefits and leadership in the stewardship of Minnesota's forests. One of the primary causes of surface water contamination in the state is the over development of lakeshore. Currently tax and market pressures force Minnesota's shore landowners to sell off land that has been in their families generations, in most cases. No matter how much habitat we buy, if the rest of it is broken down into fifty-foot lots, our waters will continue to spiral downward.

Since 2001, the average size of a seasonal lot in Minnesota has shrunk from 78 acres to 53 acres.

The other salient fact that both MSRPO research and USFS research confirmed is that most of our forests and lakeshores are owned by people are over the age of 60. They do not want to sell their land, but would prefer to pass it on. They value this land, but are losing the battle, and are being priced out in waves. Conservation Easements can provide some income tax and other benefits, but create major property tax difficulties. In fact, sometimes assessors raise the value of land after a Conservation Easement is put on it. Few can afford to own land whose use is heavily restricted, but still suffers yearly double-digit property tax increases.

The Minnesota Statewide and Preservation Plan noted the trend toward the sale and subdivision of lakeshore and forests as top concerns. The solution they recommend is providing incentives.

  • Incentives meet the Constitutional requirements to allow owners to restore, protect and enhance water, habitat and recreational values in the state.
  • Incentives increase the percentage of Minnesotans who participate in the enjoyment, use and maintenance of our outdoor resources. Work in the woods, at the cabin or hunting shack is family work. often intergenerational. Research, detailed in such books as Last Child in the Woods, is the most valuable for children. They become invested in Minnesota's outdoors personally. It is an involvement that lasts a lifetime.
  • Incentives are one of the fastest and most cost effective ways to reach ecological goals. The Sustainable Forestry Incentive Act is a great example. Another comes from Burnett County, Wisconsin. The program asks landowners to preserve, or in the case where the shoreline had been converted to lawn, restore shorelines permanently by attaching a restrictive covenant to the property deed. After inspection, the owner receives a $250 property tax credit the first year, then $50 credit each year after. A small sign placed on the shoreline identifies the owner as a natural shoreline supporter. Preservation and restoration projects have been completed on 507 properties along 37 miles of shoreline. Officials are considering expanding the program to other areas of the state.
  • As the SFIA program demonstrates, incentive programs create excellent use indicators of success, and allow the public and elected officials to track the number of owners involved and the number of acres protected.
  • Incentives also support local communities. MSRPO research concluded that the average seasonal property owner spent in excess of $5000 in the community where their property is located. In over 200 districts, seasonal owners pay more than half of the property tax revenues even though they place few demands on the system. In addition, restoration projects that improve water quality will also increase the property tax base significantly as a recent MPCA study and studies in New York and Washington State prove.
  • Incentives also jibe nicely with the goal of increasing outreach and encouraging participation in the legislative and grant making process since funds would be going directly to land owners across the state. If the Burnett County model were followed, upon completion of a shoreline restoration or preservation project, a shoreline sign would advertise the benefits to everyone who trolls past, increasing the benefit of the project.

Property taxes, market forces, and other disincentives are driving the over development of Minnesota's shorelines and fragmenting its forest habitats at an alarming rate. Since the recent decrease in property values has not been reflected in property tax bills, which increased about 18% statewide this year on seasonal property, this trend will only accelerate.

By providing Minnesota's family forest and shoreline owners with good incentives for preserving, restoring and protecting their land, the Constitutional Amendment funds can have a bigger net positive impact than any action taken on the National Forests, State Forests, Timber Industry or Tribal Lands. Minnesota Families need your help to do what is right for the state and future generations. We cannot buy enough land to insure the long-term viability of our ecosystems.

Happily, the Minnesota Statewide and Preservation Plan outlines a path to success - incentives. Thank you.



Sincerely,

Jeff Forester

Executive Director

MSRPO Coalition, Inc.




And here is a letter sent to Rep. Dittrich following a meeting we had with her. This letter was presented to her full committee, a working group of the house Property Tax Division:

February 18, 2009

Rep. Denise Dittrich

371 State Office Building

100 Dr. Martin Luther King Jr. Blvd.

St. Paul, MN 55155-1606

Dear Rep. Dittrich:

I wanted to take a moment to share with you some thoughts on your Benchmarks survey. It is right on the money. Over the years I have heard from hundreds of property owners regarding their frustration with our property tax system.

Universally over the years MSRPO members have voiced frustration with a system that they do not understand. "Opaque" is how it is often described.

They do not understand the assessment process, the appeal process or how their tax bill is calculated.

Additionally, seasonal owners see little connection between the taxes they pay and the services they use, or even the services provided to all by the local district. There is no connection between the tax levied and the owner's ability to pay the tax. For folks that bought a modest cabin many years ago and have seen these old places become very, very valuable, mostly as knock downs, the problem is particularly acute.

Cabin owners typically pay about 30% more in taxes than similarly valued homestead properties, even though they only use their places an average of four weeks a year. In the days of property tax refunds, seasonal property was not eligible, we get no targeted tax relief or circuit breaker protection, have no senior deferral and get no credits like the taconite credit. Seasonal owners pay much more for services that they use less of, and so do not see the current system as fair in any way. Few would complain if they had to pay the same as other owners in the district, even though we use far less services. To pay more for services that we use less of is universally seen as an affront and a case of taking advantage of the system.

Your survey asks us to rate the system regarding "Simple and Efficient."

- The Department of Revenue reports that the Property tax is the most expensive tax to administer and collect.

- Lately I have been hearing frustration that the system does not do a good job of supplying revenue for local communities. Many of our members have pointed out to me, rightly I think, that any system that requires local school districts to levy year after year is somehow broken.

- Owners cannot make the board of equalization meetings, and the process is so cumbersome that it does not allow them to really have a voice. The meetings are typically held mid-week when they cannot attend, they must go through the local and county processes first without missing a meeting in order to be able to take their case to state tax court. They feel, rightly so, that the game is rigged against them.

You mention "responsive to economic conditions" and I have heard an earful over the last few months regarding this. People are furious that in a down market their assessed values and taxes are still going up - and this is above and beyond LMV increases. At a time when everyone is hurting financially, they are seeing 30% and 40% increases based on market value that no longer exists.

Finally, your survey asks about compliance and accountability. That is perhaps the biggest complaint - seasonal owners cannot vote in local elections. It is taxation without representation, with predictable results.

The seasonal owners in most districts have strong familial and social connections to the areas where their cabins or hunting shacks are located, and they would have a lot to offer these communities if their input were valued. But it typically is not. In fact the reverse is true and most seasonal owners feel derided when they attempt to get a hearing from the community in any public forum.

Thanks again for all the work you are doing, and for providing an arena for the many years worth of correspondence I have received regarding these very important issues.



Sincerely,

Jeff Forester

Executive Director

MSRPO Coalition, Inc.

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