Above: A close-up of the 1956 tile mural by Jean Beal in the lobby of the General Administration building on the Capitol Campus.
Farms
Look To Update Property Tax Program with New Bill
By
Janine Unsoeld
www.janineslittlehollywood.blogspot.com
Editor’s
Note: As with any legislative story, proposed legislation and information can
change fast. A loose coalition of farm advocates is working to create a statewide farmland
current use bill that can pass in this 60 day session. Draft legislation wording has changed dramatically this week and today. It is current as of this writing.
While sitting at the Olympia Food Co-op on the
eastside early this morning, Leslie Cushman, a volunteer small farm advocate,
transferred the latest version of a proposed piece of farmland preservation legislation to me via her
Smartphone. Talk about hot off the press.
It was an appropriate place to meet, and several Co-op
volunteers were being trained at a nearby cash register.
By correcting inequalities in the open space and agriculture laws, farmers hope to ensure the future between local food availability and farm
sustainability.
Enjoying bi-partisan, statewide support, tax relief
comes to the Washington State Legislature as House Bill 1437, a bill which
would amend the home site exemption in the Open Space law.
The proposed legislation is sponsored by
Representatives Chris Reykdal (D-22), Brian Blake (D-19), Kathy Haigh (D-35), Ed
Orcutt (R-20), Kristine Lytton (D-40), Kevin Van De Wege (D-24), and Hans Zeiger
(R-25). On the first day of this session, the bill was taken out of Rules and
referred to the House Finance Committee.
The Senate companion bill is SB 5327, sponsored by
Senators Karen Fraser (D-22), Steve Hobbs, (D-44), and Randi Becker (R-2). It
was reintroduced and retained in its present status.
It’s a bill that has seen a lot of history.
In a new proposed substitute bill, supporters are
emphasizing that farmland preservation is an important tax policy.
Currently, for farms less than 20 acres, the one
acre under a farm house is assessed at the 'highest and best use'. This
subjects smaller farms to a higher tax rate and works against efforts to
preserve working lands.
Farmers say that taxing one acre of a small farm at
fair market value hurts small farms, and ask that all farms in the current use
program be assessed the same.
The bill would abolish the "farm house
acre" practice employed by assessors. Farm land that is enrolled in the
Open Space program is currently assessed based on current use rather than fair
market value. This reduces pressure to convert farmland to other uses.
Supporters are now calling on House Finance Chair
Carlyle Reuven (D-36) and Ranking Minority Member Representative Terry Nealey
(R-16), to hold a hearing on the new bill, which ended last session as E2SHB
1437.
The Open Space Act
The details of the Open Space Act, under RCW
84.34.010, is technical. At the time of
its enactment in 1970, it was probably revolutionary, but over time, it appears
that it has not stayed in step with the diversity and changing nature of
today’s farms.
Three categories under the Open Space Taxation Act
allow for current use valuation, and are based on the size of the agricultural
parcel.
Parcels 20 acres and larger must be devoted
primarily to agricultural production. Parcels between five and 20 acres must
generate gross income from the sale of farm products of $200 or more per acre
in three of each five-year period.
Parcels that are five acres and under must generate
gross income from the sale of farm products of at least $1,500 per year in
three of each five-year period.
For parcels of 20 acres and larger, the principal
residence of the farm operator or owner is considered an integral part of the
farm, and the land under the house is valued at its current use value.
For parcels less than 20 acres, the land that the
house is situated is valued at fair market value while the remainder of the
parcel is valued at current use value.
Bill Died in Senate Last Year Last April, E2SHB 1437 passed out of the House of
Representatives with a vote of 92-1.
The Senate entertained a hearing last year on the
companion to the bill, but it did not get out of the Senate Agriculture and
Rural Economic Development committee by cutoff.
Prime sponsor Senator Karen Fraser (D-22) spoke to
her bill last year, SB 5814, saying, “It’s a tricky matter to draft a bill for
small agriculture. I want to protect the tax base and don’t want to draft a
bill that is a wide open loophole for hobby farms….
“I want to help our farmers to stay in business...farmers
that sell to farmer’s markets or sell food on a subscription basis….these are
highly appreciated land uses in our state. These farmers provide fresh food
into our local communities.”
Representatives of the Washington State Grange
supported the bill, saying “This is a great step forward to keep farmers
farming.”
Lone opposition last year was voiced by the
Association of County Officials due to a tax shift of an undetermined amount. The assessors association estimated a nearly $700,000 loss in
revenue per year, although it was unclear where this number came from since a
local governmental fiscal note was not produced. Bill supporters dispute this
figure.
Supporters say the bill, which would have been a
pilot project for Thurston County as proposed last year, would have had a very
modest fiscal impact. Why Thurston County?
“The Thurston County Commissioners supported the
legislation and testified in front of the legislative committees. The county
assessor was willing to work on resolving differences. For a program with local impacts, the support
of local government officials made a big difference. And the residents of Thurston County are
involved in a local food movement, emphasizing sustainability and community,”
said Cushman.
After some discussion and generally positive remarks
expressed by fellow committee members, Committee chair Brian Hatfield (D-19)
said he was torn on the bill, expressing concern about a possible loss of tax
revenue to local governments.
“I grew up in county government and tend to bounce
things off local government. Let’s balance this thing out…maybe there’s a
compromise, maybe not. I’m glad we’re starting this conversation,” said
Hatfield last year.
Small Farms Speak Up
Common Ground Farm in west Olympia works in community sustainable agriculture (CSA). Some of its
CSA customers who receive a weekly box of fresh vegetables and herbs from
mid-May to mid-November, have been buying Common Ground’s produce for over 20
years.
A farmer for 31 years, Nancy Laich of Common Ground testified
last year to the Senate committee. Laich served on the Thurston County Agricultural
advisory committee, and helped
Senator Fraser craft last year’s legislation. She has long worked for farmland preservation, and served on the board of the South of the Sound Community Farmland Trust.
To explain the reason for the bill, Laich explained
that the land under her house on her 15 acre farm receives continual increases in the assessed value because she is close to an urbanized area.
“It’s compared with nonconforming one acre lots hooked
up to city services. I cannot subdivide one acre or sell one acre or hook up to
city services on my street, but I am taxed at an assessed value that's the
same as these one acre lots,” said Laich in a telephone interview today.
Laich, like many farmers, uses her house as an integral part of her farm.
“Essentially, farms are small, medium and large, and we're going for the equal treatment of farms of all sizes,” she said.
Julie Puhich, also of Common Ground Farm, has been
farming for 33 years.
“Our farm provide jobs, educational opportunities,
research, and acts as a business incubator. If we had not been enrolled with
the Open Space Agricultural Program from the beginning, we would have long been
paved over,” said Putich.
Above: Otis Bell, left, chats with Senator Karen
Fraser about her small farm last year. Bell, a local farmer for eight years,
leased a one acre piece of land in Northeast Olympia to grow vegetables,
medicinal herbs, bees, and chickens. Testifying to the committee in support of
the bill last year, Bell said some farmers cannot afford large pieces of land
but make a viable living on small plots.
New Statewide Small Farm Study
A new farm survey, “Profile of Small Farms in Washington State Agriculture,” by Washington State University (WSU) Extension, says that based on U.S. Department of Agriculture criteria, 90 percent or 35,269 of Washington’s farms are considered small.
The U.S. Department of Agriculture National Commission on Small Farms defines small farms as “farms with less than $250,000 gross receipts annually on which day-to-day labor and management are provided by the farmer and/or the farm family that owns the production or owns, or leases, the productive assets.”
The WSU study states that, “Classifying farms by acreage can be misleading in a state like Washington, where productivity per acre can differ vastly depending on water availability, type of crop, and the farming strategies employed.”
Indeed, many farms now include many value-added products, such as artesian cheese, bees, and mushrooms to the list of products it produces and sells.
The study goes on to say that, “If current trends hold, we will see continued erosion of commercially viable small and moderate sized farms and their associated farmland.”
Strange
Bedfellows Collaborate
Small farmers enjoy a wide range of bi-partisan legislative
support, and have also brought together groups that might not ordinarily work
together.
Those who testified last year in support of the bill include Common
Ground Farm, Thurston County Commissioner Sandra Romero, the State Grange, the
Thurston County Farm Bureau, the South of the Sound Farmland Trust, the
Thurston County Agricultural Advisory Board, shellfish growers, farming
professors, and others.
Signing in as supporting past legislation were the
League of Women Voters, the State Conservation Commission, Calliope Farms, Lisa
Smith of Enterprise for Equity, and the Washington State Realtors.
A group of interested parties met during the
legislative interim to craft a new bill to introduce this session.
Good ideas floated in previous bill versions as
recently as yesterday addressed the inconsistent tax treatment between
counties, and recognized the value of food production to the food bank and
other charitable feeding programs. Part of the draft proposed bill would have allowed
all farms to count food bank donations as commercial activities and income. For
Eastern Washington farmers, it addressed imperfections of an old survey system.
Other ideas directed the State Conservation
Commission and the Office of Farmland Preservation to study the trends in
farming, the economic contribution of farms, and the fiscal impact of the
current use program on property taxes and taxpayers. This would have included a
comprehensive study of the food economy and the impact and role of the current
use program.
There’s a lot that can be thrown into a bill, but
when that happens, things get complicated. In many cases, simple is best. And
for a short session in particular, there just isn’t time to properly educate
legislators on the issues.
One of the interested parties that has helped craft
the new legislation regarding current use is the Thurston County Farm Bureau. The
Bureau has found itself on the other side of a few conversations with the
current county commissioners.
Jim Goche is a managing partner of Friendly Grove Farm in Olympia and a board member of the Thurston
County Farm Bureau. For about four years, Goche and his family has allowed Kiwanis volunteers to till a portion of their land, plant crops, harvest what comes up, and take it down to the Thurston County food bank.
Representing himself, Goche has communicated with the state
Department of Revenue regarding the Open Space Act to clarify the agency's role, and the county assessors’
house site designation practices. He helped draft the current legislation.
“I believe that the Department of Revenue should
check its assumptions, look more closely at the county assessors’ actions, and
ask itself whether the current administration of the Open Space Act is meeting
its stated goals….The Open Space Act is 44 years old this year…Some of its
provisions don’t support farmland preservation and food production and several
are being administered by Washington’s counties in a manner which works against
the intent of the law…One area of the Act which needs immediate attention
involves the distinction made between large and small farms.”
Goche says the world has changed and agriculture has
evolved. “Farms are smaller and now so numerous that they represent well over
half of the farms in Washington State. While these small farms may be highly
productive in growing the fresh produce that farmer’s markets, food banks, and
school nutrition programs rely on, the farm income for many is marginal….”
“Considering the importance of Washington
agriculture and the enormous contribution that small farms make to it, the
‘house site’ issue and all of the problems that go with it should be addressed
by the 2014 Legislature....I support attempts to fix for 'house site' part of the law, but believe that a better solution is to repeal the 'house site' language entirely....This will
benefit farms both large and small and help keep working lands working. It will
also help preserve farmland and maintain the open spaces and habitat that farms
provide for the public.
“We’re losing farms at an alarming rate. Every time
the state adds a regulation on one’s property, it diminishes the value and
shifts the burden to the taxpayer,” said Goche.
Thurston
County Farmlands at Risk
The Washington Conservation Commission’s Office of
Farm Preservation published a report last year, Thurston County Farmlands at
Risk.
A Thurston County farmland inventory, completed in
2009 by South of the Sound Community Farmland Trust, concludes several
startling facts:
-Thurston County has lost over 90,000 acres of
farmland since the 1950s;
-Seventy-five percent of the farmland is within
three miles of an urban growth boundary;
-Only about 51 percent of the farmland is in the
Open Space Tax program;
-The majority of farmland is not within Long Term
Agriculture zoning;
-The average age of principal farm operators is 57
years old;
-The majority of the total land in farms is on
rented land.
For
more information about the bill and the history of Washington State legislation,
go to: www.leg.wa.gov
For more information about the farmland inventory,
go to: http://www.communityfarmlandtrust.org
Also:
The League of Women Voters of Thurston County will be holding an Agriculture
Preservation forum on Thursday, January
23, 7:00 pm, United Churches of Olympia, 110 11th Ave. SE.
The forum will feature a panel with various
perspectives on agriculture economics and ways to preserve local farms.
Speakers and topics include: Erik Hagen, WSU Extension, an overview of farmland
in Thurston County; Steven Drew, County
Assessor, economic aspects of farming in Thurston County; Chris Wilcox, owner
of Wilcox Farms, a large farmer’s
perspective; Lisa Smith, executive director of Enterprise for Equity, efforts to increase the number of small
farms; Loretta Seppanen, citizen board member, South of the Sound Community Farmland Trust, efforts to purchase
and preserve farmland.
For more information, go to: www.lwvtc.org or call (360) 754-4305.
Above: LadyBerry Farms' Brussels sprouts are great sautéed with butter and a little bit of salt. I hated them too when I was kid, but now? Ymmm, they're good. And good for you!
