HF4707

Purpose

This bill changes how Minnesota taxes certain agricultural land by expanding what can be classified as agricultural property and how different kinds of land are categorized. A key goal is to include farm wineries in the agricultural property framework, along with other adjustments to related land classifications and programs.

Main Provisions

• Classification framework for agricultural land and homesteads

  • Adds farm winery operations (production on a farm) to be eligible for agricultural land classification.
  • Keeps a farmstead (the house and a surrounding one acre) taxed at the same rates as residential classes, while the rest of the land on a property under a homestead is taxed at lower agricultural rates up to a first-tier limit, with higher rates applying beyond that limit.
  • Allows a single parcel to contain both agricultural land and non-agricultural land; the assessor can classify different parts of the parcel separately based on use.

• Class 2 categories and tax rates

  • Class 2a (agricultural land and buildings): generally 1% of market value, except when part of an agricultural homestead (see above); may include land that would otherwise be 2b if it’s interspersed with 2a land and not easy to value separately.
  • Class 2b (rural vacant land): generally 1% of market value; includes land not used for agriculture and certain timber-related land; special rules apply for parcels 20 acres or larger with structures.
  • Class 2c (managed forest land): 0.65% of market value, for 20 to 1920 acres per taxpayer managed under a forest plan (meets Chapter 290C requirements) but not enrolled in a separate incentive program; requires an application and state approval; annual verification by the Natural Resources Department.
  • Class 2d (airport landing area): 1% of market value for privately owned public-use airports that are licensed as public airports.
  • Class 2e (commercial aggregate deposits): 1% of market value for land with a commercial aggregate deposit that is not actively mined; requires 10 contiguous acres, a formal affidavit describing the deposit and mining status, required permits, and professional delineation; if mining begins, the land must be revalued and may be removed from an aggregate preservation program.

• Agricultural uses and definitions

  • Agricultural land covers at least ten contiguous acres used for agricultural purposes, or certain smaller setups (including specific circumstances for land with residences) if used for particular farming activities, such as intensive farming, market farming, or farm wineries.
  • Agricultural purposes include production for sale, storage and servicing of equipment, enrollment in certain conservation programs, buffer or erosion-control features, and other listed activities.
  • Includes a broad list of agricultural products and activities (livestock, dairy, poultry, crops, apiary products, aquaculture, equestrian activities, game birds, maple syrup, and related processing) and allows certain nontraditional farm uses if they meet the agricultural intent.
  • Farm wineries licensed under section 340A.315 are explicitly included in agricultural land when meeting the stated use requirements.

• Mixed-use parcels and exemptions

  • If a parcel is used for both agricultural and non-agricultural (commercial/industrial) purposes, the agricultural portion is taxed at the appropriate agricultural class (1b, 2a, or 2b, as applicable) and the remainder at the class appropriate to its non-agricultural use.

• Special rules and administrative details

  • The agricultural classification is not determined by the market value of residential structures on the parcel.
  • Local conservation programs and other restrictions can be superseded for tax purposes by this agricultural classification framework.
  • Greenhouses or nurseries used primarily for growing plants (and not merely display) can qualify as agricultural; if the structure is used mainly for display, it does not.
  • Definitions and some related rules are exempt from standard rulemaking processes.
  • The bill references several conservation and forest programs (Local Conservation Programs, Reinvest in Minnesota, Conservation Reserve Program, Sustainable Forest Management Incentive Program) and requires annual coordination and verification between the NR Department and county assessors.

Significant Changes

• Farm wineries included: The bill explicitly expands agricultural land eligibility to farm wineries that produce wine on a farm, aligning winery activity with agricultural land classification.
• Expanded class 2 categories: Adds and clarifies 2a (agricultural land), 2b (rural vacant land), 2c (managed forest land), 2d (airport landing area), and 2e (aggregate deposits), with specific rates and qualification rules.
• New ownership and use rules: Allows agricultural classification even when parts of a parcel are leased or used by others, as long as the agricultural portion meets criteria; requires careful separation of agricultural vs. non-agricultural uses on mixed parcels.
• Forest land incentive and verification: Introduces a specified path for qualifying as class 2c managed forest land, including application timing and annual verification by the Department of Natural Resources.
• Aggregate deposits and active mining: Establishes a process for classifying land with undeveloped but present aggregate deposits, including affidavits and ongoing reporting if mining begins, and potential removal from related programs.
• Local conservation program involvement: Recognizes local conservation payments and environmental benefits while setting conditions for eligibility.
• Administrative clarity: Provides defined terms and clarifications surrounding what counts as agricultural products and uses, including floriculture and related structures, and sets rules to prevent misclassification based on residential value alone.

Notable Terminology from the Bill

• Agricultural land, agricultural homestead
• Class 2a, Class 2b, Class 2c, Class 2d, Class 2e
• Farm winery, license under section 340A.315
• Market value, first tier valuation limit
• Agricultural purposes, agricultural products
• Local conservation program, Reinvest in Minnesota, Conservation Reserve Program
• Sustainable forest management incentive program (Chapter 290C)
• Managed forest land
• Aggregate deposit (commercial aggregate deposit)
• Active mining, affidavit, conditional use, permitted mining
• Nursery, floriculture, horticulture
• Mixed-use parcels, agricultural portion, non-agricultural portion
• Airport landing area, privately owned public-use airport
• Contiguous acreage, subdivision 23 (as used in the bill)

Relevant Terms agricultural land, farm winery, Class 2a, Class 2b, Class 2c, Class 2d, Class 2e, agricultural homestead, market value, first tier valuation limit, local conservation program, Reinvest in Minnesota, Conservation Reserve Program, sustainable forest management incentive program, managed forest land, aggregate deposit, active mining, nursery, floriculture, horticulture, mixed-use parcel, contiguous acreage, airport landing area.