If you’re a farmer in Pennsylvania or you own a large estate, you should be familiar with The Pennsylvania Farmland and Forest Land Assessment Act of 1974, also known as, “Clean and Green.” Even if you do not farm or own a lot of land, some of your neighbors could be participating in the program. Clean and Green is preferential tax assessment for landowners who devote land to “agricultural use”, an “agricultural reserve”, or a “forest reserve”. Basically, land devoted to one of those uses can be taxed on the fair use value- the value of the land as it is used rather than the fair market value, which accounts for its potential for development. This amount is determined by the Pennsylvania Department of Agriculture and the county where the land is located and typically results in a significantly lower prorpety tax for the enrollee.
Overview and History: When passed in 1974, Clean and Green was a way to encourage landowners to keep land in open space uses and help stop development encroachment through providing some relief from real property taxes. Sponsoring Senator Thomas W. Andrews, stated Clean and Green's purpose was “inducing farmers to keep their land in agricultural uses and thwarting the development of rural areas where land is greatly needed for the production of food.”
Since Clean and Green was originally passed, it has been amended eight times.
To Qualify: A landowner must be willing devote at least 10 acres of contiguous land to one or more of the three uses. Contiguous can mean several parcels of land, as long as the land is beside each other and are part of the same unit. Landowners must also classify which use they are enrolling the land under and abide by the permissions and restrictions of that use or uses. The uses are:
“Agricultural Use” which is land used for producing an agricultural commodity or land that meets a soil conservation program through an agreement with the Federal Government. This category requires that the land has been devoted to agriculture for at least three years prior to enrolling in Clean and Green. However, if the agricultural use land is less than 10 acres and/or has not been operating for three years, the land can still qualify if the anticipated yearly gross income is at least $2,000 from the production of an agricultural commodity.
“Agricultural Reserve” is land used for non-commercial open space for outdoor recreation or the enjoyment of scenic or natural beauty and open to the public for use, without charge or fee, on a nondiscriminatory basis. It also includes any land devoted to the development and operation of an alternative energy system, if a majority of the energy annually generated is used on the land.
“Forest Reserve” is land stocked by forest trees of any size and capable of producing timber or other wood products. This type of use also includes land devoted to an alternative energy system, if a majority of the energy annually generated is used on the tract.
The Catch: So why wouldn’t every farmer and estate owner jump at the opportunity for lowered taxes? Probably because if the land is ever used for another purpose, not in line with Clean and Green, then the owner of the property can face with up to seven years of rollback-taxes including interest. The taxes due will be the difference between the taxes already paid and the taxes on the fair market value of the land. Additionally, landowners can be subject to a $100 fine for violations of the restrictions on use. Landowners are obligated to give at least a 30 days notice to the county tax assessor of a proposed change in use of the land, a change in ownership of a portion of the land or of any type of division or conveyance of the land. Owners should be positive that the land will be used for the Clean and Green purpose indefinitely. The rollback-taxes become due at the time the land is changed.
An enrolled landowner may sell Clean and Green land without rollback-taxes, in whole or in part, if the land will continue to meet the minimum requirements of Clean and Green. However, rollback-taxes can still be due if the sold land is no longer used for a Clean and Green purpose. If that happens, then the new landowner can be responsible for seven years of rollback-taxes on the entire parcel. If the land switches use after seven years, then the new landowner will still have to pay rollback-taxes, but only for the parcel that she owns.
However, if the land is sold is put into a use that does not qualify for the program, then rollback-taxes will kick in and the sale will be considered a “split-off.” Also, Clean and Green owners cannot sell the lesser of than 10 acres, or 10% of the enrolled land for a purpose outside of Clean and Green. However, if a landowner donates the land it can be exempt from rollback-taxes. However, counties, which are the municipal level that collects enrollment and payment of the taxes, always have the option of not collecting the rollback-taxes.
Application: So while the deadline for 2019 enrollment ended June 1st of this year, if you think Clean and Green enrollment may be right for you, now is the right time to start planning to enroll next year. Think about your land parcels, plan what you think the future of your land will be, and become familiar with the statute and applicable regulations.
Applications are due each year to the county where the land is located byJune 1, then approved land will be enrolled for the next tax year. So, applications received from now until June 1, 2019 are eligible for 2020 enrollment. The application can be obtained from the appropriate county board of tax assessment office. After the land is enrolled there is no need to re-apply, because the land is essentially entered into a covenant with the Commonwealth which binds the land to the Clean and Green purpose.
Conclusion: There are a lot of benefits to enrolling land, but it also comes with restrictions on the use of your land. So, enrolling should not be taken lightly. If someone is interested in participating in Clean and Green, then it would be wise to meet with an attorney, accountant, land advisor, or the county tax assessor. Most importantly take time and think over the decision to make sure it is the right path for your land, because if so, it could save you lots in property taxes!
*this blog is not considered legal advice, but rather an educational overview. Please consult with an attorney, accountant, tax advisor, etc. before enrolling.