Timber, wetlands tax relief

EDITOR’S NOTE: This story was first published in the Springfield State Journal-Register on Aug. 4, 2007.

BY CHRIS YOUNG

SPRINGFIELD, ILL. - A deer hunter lucky enough to have his own patch of woods behind the farmhouse where the occasional big buck roams probably thinks his timber is the most valuable piece of ground on Earth.

And he’s not the only one.

The rising value of timbered land, especially for its recreational potential, has caught the attention of property-tax assessors and conservation groups alike in recent years.

The Illinois General Assembly responded this spring by passing a law designed to protect woods, prairies and wetlands from tax rates so high they might force development of the state’s dwindling wildlife habitat.

With tax rates for non-agricultural land set to increase due to a stricter interpretation of an existing rule, conservation and environmental organizations feared landowners would log their timbered land or develop it in order to pay higher property taxes.

The Illinois General Assembly stepped in last spring to study the issue and develop a solution that would take into account the value of timbered land for its environmental or wildlife-habitat benefits.

“I think the thing that surprised all of us the most was the original letter that went out from (the Illinois Department of Revenue) put no value on forest or wetlands or grasslands unless there was an agricultural base to it,” says Jerry Beverlin, who represented the United Bowhunters and the Illinois Federation for Outdoor Resources by attending meetings of the task force studying the issue.

The letter asked county property-tax assessors not to automatically treat timbered land the same as agricultural land. Wooded acres managed for timber production or used as an orchard or tree farm are included in the definition of farm ground.

“If you had wanted to manage your timber for something other than its lumber value, there was no credit; there was absolutely no credit for someone who wanted to mange a prairie or wetland,” he says. “Your taxes were going to 331/3 percent (of fair market value).

“It really made no sense. In terms of the amount of habitat that still exists in this state, something like this could have been devastating.”

Both the House and Senate passed SB17, known as the Conservation Stewardship Law, this spring. It taxes timbered land at five percent of fair market value. That rate is slightly higher than that of farm ground, but not high enough that landowners would be forced into decisions about the land based solely on economics. The bill awaits Gov. Rod Blagojevich’s signature.

Beverlin says negotiations and changes to the bill continued until it came up for a vote.

He gives credit to Sen. John Sullivan, D-Rushville; Sen. John Jones, R-Mount Vernon; and Rep. Dan Reitz, D-Sparta.

“Sen. Sullivan certainly took the driver’s seat in the process,” he says. “It certainly was a lot of work.”

To receive the favorable tax rate, landowners must have a management plan approved by the Illinois Department of Natural Resources. Under the old rules, timbered land had to be enrolled in a forestry program with some harvested to receive the favorable rate.

State foresters were inundated with requests for management plans after the rule was clarified last year, and Sullivan says he expects a backlog of requests for plans to care for wetlands, woodlands and prairies. For this reason, landowners pay the lower tax rate as long as their plan is under consideration.

“The only other thing is that if the property is denied, or it is not eligible, they will have to go back and pay the full assessment,” Sullivan says. “Until we can get some additional staff in the department, we’re going to give (landowners) the benefit of the doubt until they are approved.”

Sullivan says getting additional positions approved for DNR, or any state agency, is especially difficult in a year with stalemated budget talks.

“It is a big issue throughout the state at all of these agencies,” he says. “It has been an uphill battle, but we’re still working on it.”

Marcelyn Love, DNR spokeswoman, says staffing issues are not expected to be a problem.

“We’re not expecting it to be burdensome on our staff,” she says.

Landowners and conservation entities will be able to help craft their own management plans. Formal rules are expected by the end of the year, she says.

Sullivan says reaction to the new plan has been favorable. Initially, there was a lot of confusion, and many landowners feared their taxes would increase dramatically. Once they learned their options, Sullivan says, views were more positive.

“There is no doubt there is a wait-and-see attitude, since it is a new program,” he says.

“Once we know where we stand, they are going to have a better idea. The initial reaction (of his constituents) has been very favorable.”

Beverlin says it took a lot of convincing to get lawmakers to understand the value of non-commercial land.

“I think there was a perception that people were making a lot of money and rich people were buying up this timbered land, and this was an opportunity to bring in some money for those county coffers,” he says.

Tom Schwartz, Illinois director of conservation for Pheasants Forever and Quail Forever, says it boils down to the vast majority of Illinois acres being privately owned.

He says Illinois ranks last among Midwestern states in acres owned by the state per capita, and that acreage held in state ownership in Illinois amounts to only 1 percent.
Beverlin says the bill’s passage was critical.

“Our interest was in protecting what few natural resources this state has left.”