August 15, 2019
Lack of access to affordable land is routinely cited by aspiring and established farmers alike as a primary challenge to entry and expansion. Since the 1940’s farmland has been steadily converted to other uses and regrown into New England forest, creating a patchwork of separate small parcels of farmland and former farmland. Many of these parcels are less than five acres, and so cannot benefit from Chapter 61A tax reduction as currently written. At the same time, economic and social forces have generated significantly more small and urban farming operations, many taking place on parcels under five acres, and many struggling with economic viability. Thousands of people, many of them immigrants and low-income, tend parcels that are less than one acre.
As a result, some agricultural land protection policies no longer support farming in the Commonwealth as well as intended, or as necessary to meet current conditions. The MA Local Food Action Plan cites the five-acre threshold as barrier to preserving the type of small parcels valuable to startup farm enterprises or those serving urban markets. And these policies are significant barriers to both equity and food justice. Communities and individuals that do not have access to chapter land, typically provided through inheritance and family wealth, remain systematically disadvantaged because wealth is often generated from owning property. Maintaining ownership is predicated on being able to afford to pay taxes, and exclusion from the tax reductions of 61A creates extensive barriers to maintaining ownership, continuing the cycle of functional exclusion.
Therefore, in order to support small and urban farmers, and help address equity, Chapter 61A should be expanded to reduce property taxes on all farmland, regardless of size, as called for in the Plan.
What does 61A do and how are valuations set?
Chapter 61A currently provides property tax relief for active farmland of five acres or more by assessing the land based on its agricultural value rather than its best use value. The Farmland Valuation Advisory Commission (FVAC) meets annually to adopt the range of recommended values for the various categories of land classified under Chapter 61 and 61A, though current law allows a municipality to set its own valuation if it chooses. The FVAC ranges of value are to be used in conjunction with the Assessors’ appraisal knowledge, judgment and experience as to agricultural, horticultural and forest land values. All values adopted outside the range recommended by the FVAC must be supported by a comprehensive study of local factors influencing value, together with a detailed description of the selected valuation models and resulting use value estimates.
Power to set such a different valuation of property is derived from Article 99 of the Massachusetts Constitution. Without it, the land would have to be valued like all other land. Article 99 was adopted by the General Court during the sessions of 1969 and 1971 and approved and ratified by voters in November, 1972.
What impact does Chapter 61 land have on total tax revenue for a city or town?
Chapter 61 impacts assessed value, not total tax revenue. As the total property value of a municipality changes (up or down) the tax rate is modified to generate the total revenue needed to meet the approved budget. Thus, land moved into chapter classification (60, 61 A&B) will lower the total valuation and the tax rate will rise so that revenue from other property increases such that total revenue for the municipality is maintained.
What other solutions might help resolve this issue?
MGL 59: section 5 (Property Tax Exemptions) are created by legislative action. Section 5 Lists numerous exemptions and partial exemptions from property taxes, which are allowed under Ch 59 section 2A. This section states that all classes of land may be exempt from taxation under other provisions of law. Adding an exemption for up to the entire assessed value of real estate in agricultural or horticultural use, with or without other stipulations is possible.
Three current bills H2551/S1691 and S1663 amend GL 59: section 5 in this manner. They are limited in scope and value however. H2551/S1691 would create an option to exempt taxes, and only if the land is less than two acres in area, has $500 or more in agricultural sales, and is in a city or town of at least 50,000 inhabitants or a Gateway city.
S1663 would create the option to reduce residential and commercial property value by 35% if it's providing eco services as specified by EOEEA.