PROPOSED RULEMAKING
DEPARTMENT OF AGRICULTURE
[7 PA. CODE CHS. 137, 137a AND 137b]
Preferential Assessment of Farmland and Forest Land Under the Clean and Green Act
[30 Pa.B. 4573] The Department of Agriculture (Department) proposes to establish regulations for implementing the Pennsylvania Farmland and Forest Land Assessment Act of 1974 (72 P. S. §§ 5490.1--5490.13), commonly referred to as the Clean and Green Act (act).
In summary, the act allows owners of agricultural, agricultural reserve or forest reserve land to apply for preferential assessment of their land. If the application is approved, the land receives an assessment based upon its use value, rather than its market value.
The Department offers the proposed amendments to replace outdated provisions, incorporate provisions that reflect various issues which have arisen under the act, provide examples to guide the regulated community and address the revisions to the act accomplished by the act of December 21, 1998 (P. L. 1225, No. 156) (Act 156). The proposed amendments will delete current regulations in Chapter 137 (relating to preferential assessment of farmland and forest land) and the current statement of policy in Chapter 137a (relating to Clean and Green Act--statement of policy), and replace these chapters with a single chapter, Chapter 137b (relating to preferential assessment of farmland and forest land under the Clean and Green Act).
Authority
The amendments are proposed under authority of section 11 of the act (72 P. S. § 5490.11), which requires the Department promulgate regulations necessary to promote the efficient, uniform, Statewide administration of that statute. In addition, section 12 of Act 156 (72 P. S. § 5490.4a note) amended the act to allow the Department to implement the interim regulations which are currently in Chapter 137a without proceeding through the regulatory promulgation process ordinarily required by law. It also required the Department to replace this statement of policy with formal regulations by April 30, 2001.
Need for the Proposed Amendments
There is an immediate need for the proposed amendments. As stated, Act 156 requires the Department to replace the current statement of policy with formal regulations by April 30, 2001. In addition, the proposed amendments will replace current outdated and inadequate regulations and help bring about uniform interpretation and application of the act throughout this Commonwealth.
In summary, the Department is satisfied there is a need for the proposed amendments, and that they are otherwise consistent with Executive Order 1996-1, ''Regulatory Review and Promulgation.''
Summary of the Proposed Amendments
As stated, the proposed amendments will replace outdated regulatory provisions, incorporate provisions to resolve questions that have arisen under the act, provide examples to guide the regulated community and address the revisions to that act accomplished by Act 156. The proposed amendments will delete current regulations in Chapter 137 and the current statement of policy in Chapter 137a and replace these chapters.
The Department solicited comments from affected parties as it drafted the proposed amendments. Among those offering comments were the Pennsylvania Farm Bureau, legislative staff, private individuals and county assessors or county officials from Bradford, Clinton, Dauphin, Lancaster, Lehigh, Mifflin, Montgomery, Northampton, Sullivan and Union Counties. Although there were disagreements among commentators, and between commentators and the Department, numerous suggestions offered by these commentators have either been incorporated into the proposed amendments or have helped shape this document.
A summary of some of the more significant provisions of the proposed amendments follows.
Proposed § 137b.2 (relating to definitions) consolidates definitions found in the act, Chapter 137 and Act 156. It also adds several new terms, such as ''enrolled land'' and ''ineligible land.''
Proposed § 137b.11 (relating to general) provides an explanation of what constitutes agricultural land, agricultural reserve land and forest reserve land--the three types of land eligible for preferential assessment under the act. It also clarifies the circumstances under which land may be enrolled to receive a preferential tax assessment. This section emphasizes that ''farmstead land'' is to be included in the eligible land, and that ineligible land may be included in an application for preferential assessment, but may not be preferentially assessed. The section contains a number of examples to help illustrate its provisions.
Proposed § 137b.41 (relating to application forms and procedures) describes the general procedure by which a landowner may apply for preferential assessment under the act. It also addresses the types of proof which a county assessor might reasonably require of a landowner to demonstrate that land is in an eligible use, with particular emphasis on the types of documentation that can establish ''agricultural use'' or ''forest reserve.''
Proposed § 137b.42 (relating to deadline for submission of applications) describes the application window for persons seeking preferential assessment of their land under the act. A landowner who applies for preferential assessment by June 1 of a particular year, and whose application is subsequently approved, will begin to receive the preferential assessment as of the commencement of the tax year of each taxing body in the following calendar year.
Proposed § 137b.46 (relating to fees of the county board for assessment appeals) describes the fees which may be charged by a county board for assessment appeals for processing or amending applications for preferential assessment. Subsection (b) lists the circumstances where an application should be amended without charge.
Proposed § 137b.51 (relating to assessment procedures) describes the assessment process. In summary, the Department will provide a county assessor with use values for various land use categories and land use subcategories. The county assessor will use these values--or county-assessor-generated use values that are lower than those provided by the Department--in determining a ''total use value'' for a tract of enrolled land. This total use value is used in calculating the preferential assessment for the enrolled land. To provide a meaningful basis for comparing county-assessor-generated use values to those generated by the Department, this section requires that a county assessor generate use values for the same land use subcategories with respect to which the Department generates its use values.
Proposed § 137b.52 (relating to duration of preferential assessment) describes various circumstances that would alter or end preferential assessment of enrolled land. It also clarifies that the payment of roll-back taxes with respect to some portion of a tract of enrolled land does not automatically trigger the removal of the entire tract from preferential assessment. Subsection (d) sets forth a number of examples to illustrate this point. Subsection (e) lists some of the circumstances under which a county should terminate the preferential assessment of a tract of enrolled land.
Proposed § 137b.53 (relating to calculation and recalculation of preferential assessment) requires a county assessor to recalculate the preferential assessment of currently-enrolled land if farmstead land on the currently-enrolled land is not also preferentially assessed, or if the current assessment was calculated with use values that are higher than those provided by the Department. Also, if a county conducts a county-wide reassessment, it shall recalculate the preferential assessment of all enrolled land. This section does not limit a landowner's right to seek recalculation of the preferential assessment.
Proposed § 137b.62 (relating to enrolled ''agricultural use'' land of less than 10 contiguous acres) contains a description of the types of evidence that will suffice to demonstrate that a particular tract of less-than-10 acres of ''agricultural use'' land generates at least $2,000 in income from agricultural production each year.
Proposed § 137b.63 (relating to notice of change of application) requires an owner of enrolled land to provide a county assessor at least 30 days' advance written notice of a change in use of the land to something other than agricultural, agricultural reserve or forest reserve, or if there is a change in ownership of the enrolled land, or if there is a division or conveyance of the land.
Proposed § 137b.64 (relating to agricultural reserve land to be open to the public) attempts to clarify the requirement of section 2 of the act (72 P. S. § 5490.2) that ''agricultural reserve'' land be ''. . . used for outdoor recreation of the enjoyment of scenic or natural beauty and open to the public for this use, without charge or fee, on a nondiscriminatory basis.'' The section allows a landowner to place reasonable restrictions on the uses to which the enrolled land may be put, and affords county assessors the option to establish procedures by which to identify the specific uses to which enrolled land may be put and disseminate that information to the public.
Proposed § 137b.71 (relating to death of an owner of enrolled land) provides that a ''Class A'' beneficiary who inherits enrolled land is not liable for roll-back taxes if the tract the beneficiary inherits does not meet the minimum requirements for preferential assessment. If the beneficiary subsequently changes the character or use of the land so that it no longer meets the minimum requirements for preferential assessment, though, preferential assessment shall cease and roll-back taxes shall be due.
Proposed § 137b.72 (relating to direct commercial sales of agriculturally related products and activities; rural enterprises incidental to the operational unit) allows for up to 2 acres of enrolled land to be used for activities related to agriculture and supportive of agricultural production on the remaining enrolled land. Preferential assessment would end on this up-to-2-acre tract, and roll-back taxes would also be due with respect to that tract.
Proposed § 137b.73 (relating to wireless or cellular telecommunications facilities) allows for a small portion of enrolled land to be leased for the erection and operation of a cellular communications tower. Preferential assessment ends with respect to the leased tract and roll-back taxes are due with respect to that leased tract, as well.
Proposed § 137b.74 (relating to option to accept or forgive roll-back taxes in certain instances) affords a county assessor the option to waive roll-back taxes with respect to certain enrolled land that is transferred to specific charitable organizations for charitable purposes.
Proposed §§ 137b.75 and 137b.76 (relating to transfer of enrolled land for use as a cemetery; and transfer of enrolled land or transfer of an easement or right-of-way across enrolled land for use as a trail) address situations where transfers of enrolled land to specific entities for specific uses are allowed without triggering liability for roll-back taxes or ending preferential assessment of that portion of the enrolled land that is not transferred.
Proposed § 137b.81 (relating to general) addresses the situations in which a landowner may be liable for roll-back taxes with respect to enrolled land. In general, a change in use of enrolled land to something other than agricultural use, agricultural reserve or forest reserve triggers liability for roll-back taxes.
Proposed §§ 137b.82--137b.84 (relating to split-off tract; split-off that complies with section 6(a.1)(1)(i) of the act; and split-off that does not comply with section 6(a.1)(1)(i) of the act) address ''split-offs'' of enrolled land, and differentiate between split-offs that occur in accordance with the criteria in section 6(a.1)(1)(i) of the act and those that do not. The former triggers liability for roll-back taxes on the split-off tract only, while the latter triggers liability for roll-back taxes on the entire tract of enrolled land.
Proposed § 137b.89 (relating to calculation of roll-back taxes) provides a formula by which a county assessor can calculate the roll-back tax amount, plus simple interest thereon at the rate of 6% per annum.
Proposed § 137b.93 (relating to disposition of interest on roll-back taxes) describes requirements imposed by section 8(b.1) of Act 156 (72 P. S. § 5490.8(b.1)) with respect to the disposition of interest on roll-back taxes. Prior to Act 156, this interest belonged to the various affected taxing authorities. Act 156 requires this interest be provided to the county agricultural land preservation board for use under the Agricultural Area Security Law (3 P. S. §§ 901--915), which pertains to the purchase of agricultural conservation easements. If the county does not have such a board, the county assessor is to coordinate with the Department to arrange the transfer of the interest to the Agricultural Conservation Easement Purchase Fund, to be used in the Statewide agricultural conservation easement purchase effort.
Proposed §§ 137b.101--137b.112 (relating to duties of a county assessor) provide an overview of the various responsibilities of a county assessor under the act. These duties involve recordkeeping, recording approved applications, updating records on an annual basis, determining total use values, notifying landowners of changes in status, enforcement, evidence gathering and assessment of roll-back taxes.
Proposed § 137b.131 (relating to civil penalties) restates the penalty provisions in section 5.2 of the act (72 P. S. § 5490.5b). That provision allows for the imposition of a $100 civil penalty against a landowner who violates any provision of the act or its attendant regulations.
Persons Likely to be Affected
The proposed amendments promote the efficient, uniform, Statewide administration of the act. They update and supplant outdated and inadequate regulations in Chapter 137, supplant the statement of policy in Chapter 137a and implement changes to the act accomplished by Act 156. Although a number of persons and entities are likely to be impacted by the subject matter of this proposed rulemaking, the provisions of the act, rather than the provisions of the proposed regulations, drive these impacts.
Owners of agricultural, agricultural reserve and forest reserve land meeting the minimum requirements for preferential assessment set forth in the act will be affected by the proposed amendments. The use values prescribed by the act are likely to decrease taxes for these owners of enrolled land, or maintain these taxes at a comparatively lower level than those imposed upon owners of land that is not enrolled under the act to receive preferential assessment.
Taxpayers who do not own agricultural, agricultural reserve and forest reserve land meeting the minimum requirements for preferential assessment in the act will be impacted by the proposed amendments, in that they are the likely entity to be called upon to makeup any tax revenue shortfalls caused by a decrease in the taxes of those persons described in the preceding paragraph.
County governments will be affected by the proposed amendments, in that there is likely to be expense involved in recalculating preferential assessments as required under the act. There may also be costs involved as owners of currently-enrolled land seek recalculation of the preferential assessments of their land. In addition, the amendment to the act accomplished by Act 156 may result in tax revenue shortfalls where collections from agricultural, agricultural reserve and forest reserve lands are lower than anticipated.
Fiscal Impact
Commonwealth The proposed amendments will have no appreciable fiscal impact upon the Commonwealth.
Political Subdivisions The proposed amendments will impose costs upon county governments. As stated previously, counties are likely to incur expenses in recalculating preferential assessments as required under the act. There may also be costs involved as owners of currently-enrolled land seek recalculation of the preferential assessments of their land. In addition, the amendment to the act accomplished by Act 156 may result in tax revenue shortfalls when collections from agricultural, agricultural reserve and forest reserve lands are lower than anticipated.
Private Sector If the act (as amended by Act 156) results in a county receiving less tax revenue than anticipated from agricultural, agricultural reserve and forest reserve lands, other taxpayers from the private sector (that is, owners of lands that are not in agricultural use, agricultural reserve or forest reserve) may ultimately be called upon to make up this tax revenue shortfall.
General Public If the act (as amended by Act 156) results in a county receiving less tax revenue than anticipated from agricultural, agricultural reserve and forest reserve lands, other taxpayers (that is, owners of lands that are not in agricultural use, agricultural reserve or forest reserve) may ultimately be called upon to make up this tax revenue shortfall.
Paperwork Requirements
The proposed amendments will not result in an appreciable increase in the paperwork handled by the Department.
Regulatory Review
The Department submitted a copy of the proposed amendments to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House and Senate Standing Committees on Agriculture and Rural Affairs on August 21, 2000, in accordance with section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)). The Department also provided IRRC and the Committees a detailed Regulatory Analysis Form prepared by the Department in compliance with Executive Order 1996-1, ''Regulatory Review and Promulgation.'' A copy of this material is available to the public upon request.
Under section 5(g) of the Regulatory Review Act, if IRRC has an objection to any portion of the proposed amendments, it must notify the Department within 10 days of the close of the Committees' review period. The notification shall specify the regulatory review criteria which have not been met by that portion. The Regulatory Review Act sets forth detailed procedures for review of these objections by the Department, the General Assembly and the Governor prior to the publication of the proposed amendments.
Public Comment Period
The Department invites public comment with respect to the proposed amendments. Written comments should be directed to the contact person. The public comment period with respect to the proposed amendments shall expire after 30 days from publication of the proposed amendments in the Pennsylvania Bulletin.
Annotated Copies Available
The Department will e-mail interested persons a copy of an annotated, unofficial version of the proposed amendments. The extensive annotations reference statutory authority for various provisions of the proposed amendments, cite related provisions from the current regulations in Chapters 137 and 137a, and summarize comments received by the Department in the preliminary drafting process for the proposed amendments. Requests for E-mail copies of the annotated, unofficial version of the proposed amendments should be directed to the contact person identified in this Preamble.
Contact Person
Further information is available by contacting the Department of Agriculture, Bureau of Farmland Protection, 2301 North Cameron Street, Harrisburg, PA 17110-9408, Attention: Raymond C. Pickering, (717) 783-3167.
Sunset/Expiration Date
Although no sunset or expiration date is set for the regulations, the Department would review their efficacy on an ongoing basis.
Effective Date
The proposed amendments will take effect upon the date of final adoption.
SAMUEL E. HAYES, Jr.,
SecretaryFiscal Note: 2-133. No fiscal impact; (8) recommends adoption.
(Editor's Note: As part of this proposed rulemaking, the Department is proposing to delete the text of Chapters 137 and 137a, which appear at 7 Pa. Code pages 137-1--137-35, serial pages (257043)--(257077) and pages 137a-1--137a-27, serial pages (257079)--(257105). The following chapter is new and is printed in regular type to enhance readability.)
Annex A
TITLE 7. AGRICULTURE
PART V-C. FARMLAND AND FOREST LAND
CHAPTER 137b. PREFERENTIAL ASSESSMENT OF FARMLAND AND FOREST LAND UNDER THE CLEAN AND GREEN ACT GENERAL PROVISIONS
Sec.
137b.1. Purpose. 137b.2. Definitions. 137b.3. Responsibilities of the Department. 137b.4. Contacting the Department. ELIGIBLE LAND
137b.11. General. 137b.12. Agricultural use. 137b.13. Agricultural reserve. 137b.14. Forest reserve. 137b.15. Inclusion of farmstead land. 137b.16. Residence not required. 137b.17. Common ownership required. 137b.18. County-imposed eligibility requirements. 137b.19. Multiple tracts on a single application. 137b.20. Inclusion of all contiguous land described in the deed to the tract with respect to which enrollment is sought. 137b.21. Exclusion of noncontiguous tract described in a single deed. 137b.22. Landowner may include or exclude from the application tracts described in separate deeds. 137b.23. Land adjoining preferentially assessed land with common ownership is eligible. 137b.24. Ineligible land may appear on an application although it cannot receive preferential assessment. 137b.25. Multiple land use categories on a single application. 137b.26. Land located in more than one tax district. 137b.27. Assessment of ineligible land. APPLICATION PROCESS
137b.41. Application forms and procedures. 137b.42. Deadline for submission of applications. 137b.43. Applications where subject land is located in more than one county. 137b.44. County processing of applications. 137b.45. Notice of qualification for preferential assessment. 137b.46. Fees of the county board for assessment appeals. PREFERENTIAL ASSESSMENT
137b.51. Assessment procedures. 137b.52. Duration of preferential assessment. 137b.53. Calculation and recalculation of preferential assessment. 137b.54. Calculating the contributory value of farm buildings. OBLIGATIONS OF THE OWNER OF ENROLLED LAND
137b.61. Transfer of enrolled land. 137b.62. Enrolled ''agricultural use'' land of less than 10 contiguous acres. 137b.63. Notice of change of application. 137b.64. Agricultural reserve land to be open to the public. IMPACT OF SPECIFIC EVENTS OR USES ON PREFERENTIAL ASSESSMENT
137b.71. Death of an owner of enrolled land. 137b.72. Direct commercial sales of agriculturally related products and activities; rural enterprises incidental to the operational unit. 137b.73. Wireless or cellular telecommunications facilities. 137b.74. Option to accept or forgive roll-back taxes in certain instances. 137b.75. Transfer of enrolled land for use as a cemetery. 137b.76. Transfer of enrolled land or transfer of an easement or right- of-way across enrolled land for use as a trail. LIABILITY FOR ROLL-BACK TAXES
137b.81. General. 137b.82. Split-off tract. 137b.83. Split-off that complies with section 6(a.1)(1)(i) of the act. 137b.84. Split-off that does not comply with section 6(a.1)(1)(i) of the act. 137b.85. Split-off occurring through condemnation. 137b.86. Split-off occurring through voluntary sale in lieu of condemnation. 137b.87. Change in use of separated land occurring with 7 years of separation. 137b.88. Change in use of separated land occurring 7 years or more after separation. 137b.89. Calculation of roll-back taxes. 137b.90. Due date for roll-back taxes. 137b.91. Liens for nonpayment of roll-back taxes. 137b.92. Time period within which roll-back taxes are to be calculated and notice mailed. 137b.93. Disposition of interest on roll-back taxes. DUTIES OF COUNTY ASSESSOR
137b.101. General. 137b.102. Recordkeeping. 137b.103. Recording approved applications. 137b.104. Determining total use value. 137b.105. Annual update of records. 137b.106. Notification of change in preferential assessment status. 137b.107. Notification of change in factors affecting total assessment. 137b.108. Adjusting records to reflect split-off, separation or transfer. 137b.109. Enforcement and evidence gathering. 137b.110. Assessment of roll-back taxes. 137b.111. Record of tax millage. 137b.112. Submission of information to the Department. RECORDER OF DEEDS
137b.121. Duty to record. 137b.122. Fees of the recorder of deeds. MISCELLANEOUS
137b.131. Civil penalties. 137b.132. Distributing taxes and interest. 137b.133. Appealing a decision of the county assessor.
GENERAL PROVISIONS § 137b.1. Purpose.
(a) This chapter establishes procedures necessary for the uniform Statewide implementation of the act. The act provides for land devoted to agricultural use, agricultural reserve use or forest reserve use to be assessed at the value it has for that use rather than at fair market value. The intent of the act is to encourage the keeping of land in one of these uses.
(b) The benefit to an owner of enrolled land is an assurance that the enrolled land will not be assessed at the same rate as land that is not enrolled land. In almost all cases, an owner of enrolled land will see a reduction in his property assessment compared to land assessed or valued at its fair market value. The difference between assessments of enrolled land and land that is not enrolled land will be most noticeable when a county is reassessed. The intent of the act is to protect the owner of enrolled land from being forced to go out of agriculture, or sell part of the land to pay taxes.
§ 137b.2. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
Act--The Pennsylvania Farmland and Forest Land Assessment Act of 1974 (72 P. S. §§ 5490.1--5490.13), commonly referred to as the Clean and Green Act.
Agricultural commodity--Any of the following:
(i) Agricultural, apicultural, aquacultural, horticultural, floricultural, silvicultural, viticultural and dairy products.
(ii) Pasture.
(iii) Livestock and the products thereof.
(iv) Ranch-raised furbearing animals and the products thereof.
(v) Poultry and the products of poultry.
(vi) Products commonly raised or produced on farms which are intended for human consumption or are transported or intended to be transported in commerce.
(vii) Processed or manufactured products of products commonly raised or produced on farms which are intended for human consumption or are transported or intended to be transported in commerce.
Agricultural reserve--
(i) Noncommercial open space lands used for outdoor recreation or the enjoyment of scenic or natural beauty and open to the public for that use, without charge or fee, on a nondiscriminatory basis.
(ii) The term includes any farmstead land on the tract.
Agricultural use--Land which is used for the purpose of producing an agricultural commodity or is devoted to and meets the requirements and qualifications for payments or other compensation under a soil conservation program under an agreement with an agency of the Federal government.
(i) The term includes any farmstead land on the tract.
(ii) The term includes a woodlot.
(iii) The term includes land which is rented to another person and used for the purpose of producing an agricultural commodity.
Assessment ratio or county's established predetermined ratio--The ratio established by a taxing body that determines on what portion of the assessed value the millage rate is to be levied, as prescribed by assessment law.
Capitalization rate--The percentage rate used to convert income to value, as determined by the most recent 5-year rolling average of 15-year fixed loan interest rates offered to landowners by the Federal Agricultural Mortgage Corporation or other similar Federal agricultural lending institution, adjusted to include the landowner's risk of investment and the effective tax rate.
Class A beneficiaries for inheritance tax purposes--The following relations to a decedent: grandfather, grandmother, father, mother, husband, wife, lineal descendants, wife, widow, husband or widower of a child. Lineal descendants include all children of the natural parents and their descendants, whether or not they have been adopted by others, adopted descendants and their descendants and stepdescendants.
Contiguous tract--
(i) All portions of one operational unit as described in the deed or deeds, whether or not the portions are divided by streams, public roads or bridges and whether or not the portions are described as multiple tax parcels, tracts, purparts or other property identifiers.
(ii) The term includes supportive lands, such as unpaved field access roads, drainage areas, border strips, hedgerows, submerged lands, marshes, ponds and streams.
Contributory value of farm building--The value of the farm building as an allocated portion of the total fair market value assigned to the tract, irrespective of replacement cost of the building.
(i) The preferred method of calculating the contributory value of a farm building shall be a method based upon fair market comparison and the extraction of the value of the farm building from the total fair market value of the parcel.
(ii) Alternate methods of calculating this value may be used when the contributory value of a farm building using the preferred approach would not accurately reflect this contributory value.
County--The county assessor, the county board of assessment or other county entity responsible to perform or administer a specific function under the act.
Curtilage--The land surrounding a residential structure and farm building used for a yard, driveway, onlot sewage system or access to any building on the tract.
Department--The Department of Agriculture of the Commonwealth.
Enrolled land--Land eligible for a preferential assessment under an approved application for preferential assessment filed in accordance with the act.
Fair market value--The price as of the valuation date for the highest and best use of the property which a willing and informed seller who is not obligated to sell would accept for the property, and which a willing and informed buyer who is under no obligation to buy would pay for the property.
Farm building--A structure utilized to store, maintain or house farm implements, agricultural commodities or crops, livestock and livestock products, as defined in the Agricultural Area Security Law (3 P. S. §§ 901--915).
Farmstead land--Any curtilage and land situated under a residence, farm building or other building which supports a residence, including a residential garage or workshop.
Forest reserve--Land, 10 acres or more, stocked by forest trees of any size and capable of producing timber or other wood products.
(i) The term includes farmstead land on the tract.
(ii) The term includes land which is rented to another person and used for the purpose of producing timber or other wood products.
Income approach--The method of valuation which uses a capitalization rate to convert annual net income to an estimate of present value. Present value is equal to the net annual return to land divided by the capitalization rate.
Ineligible land--Land which is not used for any of the three eligible uses (agricultural use, agricultural reserve or forest reserve) and therefore cannot receive use value assessment.
Land use category--Agricultural use, agricultural reserve or forest reserve.
Land use subcategory--A category of land in agricultural use, agricultural reserve or forest reserve, established by the Department and assigned a particular use value in accordance with sections 3 and 4.1 of the act (72 P. S. §§ 5490.3 and 5490.4a). A land use subcategory may be based upon soil type, forest type, soil group or any other recognized subcategorization of agricultural or forest land.
Net return to land--Annual net income per acre after operating expenses are subtracted from gross income. The calculation of operating expenses does not include interest or principal payments.
Normal assessment--The total fair market value of buildings and ineligible land, as of the base year of assessment, on a tract multiplied by the assessment ratio.
Outdoor recreation--Passive recreational use of land that does not entail the erection of permanent structures, grading of the land, the disturbance or removal of topsoil or any change to the land which would render it incapable of being immediately converted to agricultural use.
(i) The term includes hiking, hunting, horseback riding and similar passive recreational uses of the land.
(ii) The term does not include the use of land for baseball, soccer fields, football fields, golf courses or similar uses.
Pasture--Land, other than land enrolled in the USDA Conservation Reserve Program, used primarily for the growing of grasses and legumes for consumption by livestock.
Person--A corporation, partnership, limited liability company, business trust, other association, government entity (other than the Commonwealth), estate, trust, foundation or natural person.
Preferential assessment--The total use value of land qualifying for assessment under the act.
Roll-back tax--The amount equal to the difference between the taxes paid or payable on the basis of the valuation and the taxes that would have been paid or payable had that land not been valued, assessed and taxed as other land in the taxing district in the current tax year, the year of change, and in 6 of the previous tax years or the number of years of preferential assessment up to 7.
Rural enterprise incidental to the operational unit--A commercial enterprise or venture that is conducted within 2 acres or less of enrolled land and, when conducted, does not permanently impede or otherwise interfere with the production of an agricultural commodity on that portion of the enrolled land that is not subject to roll-back taxes under section 8(d) of the act (72 P. S. § 5490.8(d)) as a result of that commercial enterprise or venture.
Separation--A division, by conveyance or other action of the owner, of enrolled land into two or more tracts of land, the use of which continues to be agricultural use, agricultural reserve or forest reserve and all tracts so formed meet the requirements of section 3 of the act.
Split-off--A division, by conveyance or other action of the owner, of enrolled land into two or more tracts of land, the use of which on one or more of the tracts does not meet the requirements of section 3 of the act.
Tract--
(i) A lot, piece or parcel of land.
(ii) The term does not refer to any precise dimension of land.
Transfer--A conveyance of all of the contiguous enrolled land described in a single application for preferential assessment under the act. When a single application for preferential assessment includes noncontiguous land, the conveyance of the entirety of any contiguous land described in that application is also a transfer.
USDA--The United States Department of Agriculture.
USDA-ERS--The United States Department of Agriculture-Economic Research Service.
USDA-NRCS--The United States Department of Agriculture-Natural Resources Conservation Service.
Woodlot--An area of less than 10 acres, stocked by trees of any size and contiguous to or part of land in agricultural use or agricultural reserve.
§ 137b.3. Responsibilities of the Department.
(a) General. The Department's responsibilities are to provide the use values described in section 4.1 of the act (72 P. S. § 5490.4a) and provide the forms and regulations necessary to promote the efficient, uniform Statewide administration of the act.
(b) Information gathering. The Department will collect information from county assessors for each calendar year to insure that the act and this chapter are being implemented fairly and uniformly throughout this Commonwealth. This information will be collected through a survey form to be provided to county assessors by the Department no later than December 15 each year, and which county assessors shall complete and submit to the Department by January 31 of the following year.
§ 137b.4. Contacting the Department.
For purposes of this chapter, communications to the Department shall be directed to the following address:
Pennsylvania Department of Agriculture
Bureau of Farmland Protection
2301 North Cameron Street
Harrisburg, PA 17110-9408
Telephone: (717) 783-3167
Facsimile: (717) 772-8798
ELIGIBLE LAND § 137b.11. General.
Three types of land are eligible for preferential assessment under the act.
(1) Land in agricultural use.
(2) Land in agricultural reserve.
(3) Land in forest reserve.
§ 137b.12. Agricultural use.
Land that is in agricultural use is eligible for preferential assessment under the act if it has been in agricultural production for at least 3 years preceding the application for preferential assessment, and is one of the following:
(1) Comprised of 10 or more contiguous acres (including any farmstead land and woodlot).
(2) Has an anticipated yearly gross agricultural production income of at least $2,000 from the production of an agricultural commodity.
§ 137b.13. Agricultural reserve.
Land that is in agricultural reserve is eligible for preferential assessment under the act if at least 60% of the land is in USDA-NRCS land capability classifications I through VI, excluding water areas and wetland areas, and the land is comprised of 10 or more contiguous acres (including any farmstead land).
§ 137b.14. Forest reserve.
Land that is in forest reserve is eligible for preferential assessment under the act if it is presently stocked with trees so that it is capable of producing annual growth of 25 cubic feet per-acre, and the land is comprised of 10 or more contiguous acres (including any farmstead land).
§ 137b.15. Inclusion of farmstead land.
(a) Farmstead land is an integral part of land in agricultural use, agricultural reserve or forest reserve. In considering whether land is in agricultural use, agricultural reserve or forest reserve, a county shall include any portion of that land that is farmstead land.
(b) Farmstead land shall be considered to be land that qualifies for preferential assessment under the act and this chapter.
§ 137b.16. Residence not required.
A county may not require that an applicant for preferential assessment under the act be a resident of the county or reside on the land with respect to which preferential assessment is sought.
§ 137b.17. Common ownership required.
A landowner seeking preferential assessment under the act shall be the owner of every tract of land listed on the application.
Example 1: Husband and wife are joint owners of two contiguous 100-acre tracts of farmland. They have common ownership of both tracts and may include these tracts in a single application for preferential assessment.Example 2: Husband and wife are joint owners of a 100-acre tract of farmland. Husband and son are joint owners of a contiguous 100-acre tract of farmland. These two tracts may not be combined in a single application for preferential assessment.§ 137b.18. County-imposed eligibility requirements.
A county assessor may not impose eligibility requirements or conditions other than those prescribed in section 3 of the act (72 P. S. § 5490.3).
Example: A county may not require an owner of contiguous--but separately deeded--tracts of land to consolidate the tracts in a single deed or require any alteration of existing deeds as a condition of eligibility for preferential assessment.§ 137b.19. Multiple tracts on a single application.
A landowner seeking preferential assessment under the act may include more than one tract in a single application for preferential assessment, regardless of whether the tracts on the application have separate deeds, are identified by separate tax parcel numbers or are otherwise distinct from each other.
(1) Contiguous tracts.
(i) A landowner seeking preferential assessment under the act may include in the application individual contiguous tracts that would not--if considered individually--qualify for preferential assessment.
(ii) If two or more tracts on a single application for preferential assessment are contiguous, the entire contiguous area shall meet the use and minimum size requirements for eligibility.
(2) Noncontiguous tracts. If any tract on a single application for preferential assessment is not contiguous to another tract described on that application, that individual tract shall--by itself--meet the use and minimum size requirements for eligibility.
§ 137b.20. Inclusion of all contiguous land described in the deed to the tract with respect to which enrollment is sought.
A landowner may not apply for preferential assessment for less than the entire contiguous portion of land described in the deed applicable to a tract with respect to which preferential assessment is sought.
Example 1: A landowner owns a single, 100-acre tract of farmland described in a single deed, and wishes to apply for preferential assessment under the act. The application may not be for less than the entire 100 acres.Example 2: A landowner owns 150 acres of farmland described in a single deed, and wishes to apply for preferential assessment under the act. The deed to this land describes three separate tracts: two contiguous 50-acre tracts and a noncontiguous 50-acre tract. The landowner's options are as follows:(1) Enroll the contiguous 50-acre tracts.(2) Enroll the noncontiguous 50-acre tract.(3) Enroll both the contiguous 50-acre tracts and the noncontiguous 50-acre tract.The landowner does not have the option to enroll only one of the contiguous 50-acre tracts.
§ 137b.21. Exclusion of noncontiguous tract described in a single deed.
If two or more tracts of land are described in a single deed, a landowner seeking preferential assessment under the act may exclude from the application for preferential assessment any separately-described tract that is not contiguous to the tracts for which preferential assessment is sought.
Example: A landowner owns 150 acres of farmland described in a single deed, and wishes to apply for preferential assessment under the act. The deed to this land describes three separate tracts: two contiguous 50-acre tracts and a noncontiguous 50-acre tract. The landowner has the option to seek to enroll the noncontiguous 50-acre tract.§ 137b.22. Landowner may include or exclude from the application tracts described in separate deeds.
If the landowner seeking preferential assessment under the act owns contiguous tracts that are described in separate deeds, the landowner may include or exclude any of the contiguous tracts from the application for preferential assessment.
§ 137b.23. Land adjoining preferentially assessed land with common ownership is eligible.
(a) General. A tract of land in agricultural use, agricultural reserve or forest reserve shall receive a preferential assessment under the act regardless of whether the tract meets the 10-contiguous-acres minimum acreage requirement or the $2,000-per-year minimum anticipated gross income requirement, or both, established in section 3 of the act (72 P. S. § 5490.3) if the following occur:
(1) The landowner owns both the tract for which preferential assessment is sought and a contiguous tract of enrolled land.
(2) The landowner files an amended application for preferential assessment, describing both the tract for which preferential assessment is sought and the contiguous tract of enrolled land. The amended application shall be in accordance with the act and this chapter.
(b) Roll-back taxes. A violation of the provisions of preferential assessment on a tract added under subsection (a) shall trigger liability for roll-back taxes, plus interest, on that tract and all other contiguous tracts identified in the amended application.
§ 137b.24. Ineligible land may appear on an application, although it cannot receive preferential assessment.
A landowner seeking preferential assessment under the act shall include ineligible land on the application if the ineligible land is part of a larger contiguous tract of eligible land, and the use of the land which causes it to be ineligible exists at the time the application is filed. Although this ineligible land may not receive preferential assessment, the applicant shall specify the boundaries and acreage of the ineligible land. The ultimate determination of whether land is eligible or ineligible shall be made by the county assessor.
Example: A landowner owns a 100-acre tract of land, 90 acres of which is productive farmland and 10 acres of which is occupied by an auto salvage yard. If the landowner seeks preferential assessment of the 90 acres of farmland, the application shall describe the entire 100-acre tract and the county will not require the 10-acre tract be surveyed-out or deeded as a prerequisite to the application being considered. If preferential assessment is granted, it will apply to the 90 acres of farmland. The 10-acre tract would continue to be assigned its fair market value and assessed accordingly.§ 137b.25. Multiple land use categories on a single application.
An applicant for preferential assessment under the act may include land in more than one land use category in the application. A county assessor shall allow the applicant to submit an application that designates those portions of the tract to be assessed under each of the different land use categories.
Example: A landowner owns 100 acres of land. The landowner may submit an application that designates 75 acres in agricultural use, 13 acres in agricultural reserve and 12 acres in forest reserve, if the acreage identified by the landowner for the particular land use category meets the minimum criteria in section 3 of the act (72 P. S. § 5490.3) for that land use category.§ 137b.26. Land located in more than one tax district.
If land for which preferential assessment is sought lies in more than one taxing district, the county's determination as to whether the land meets applicable minimum acreage requirements for eligible land shall be made on the basis of the total contiguous acreage--without regard to the boundaries of the taxing districts in which the land is located.
Example 1: A landowner has a 100-acre tract of farmland--94 acres of which lies in Township A and 6 acres of which lies in Township B. The landowner files an application seeking preferential assessment of this land. The fact that the tract lies in two separate townships shall be immaterial to the determination of whether the 100-acre tract meets the requirements for preferential assessment under the act.Example 2: A landowner has a 100-acre tract of farmland--94 acres of which lies in County A and 6 acres of which lies in County B. The landowner files an application in each county, seeking preferential assessment of that portion of the 100-acre tract lying within the respective counties. The fact that the tract lies in two separate counties shall be immaterial to the determination of whether the land described in the application meets the requirements for preferential assessment under the act.§ 137b.27. Assessment of ineligible land.
Land and buildings that are included in an application for preferential assessment under the act but are ineligible for preferential assessment shall be appraised at fair market value and shall be assessed accordingly.
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