Tax relief proposed for urban farms

Developer Eric Olsen examines crops growing on a parcel of land designated as a “village farm” for the neighborhood he built in Monmouth, Ore. The Oregon Legislature is considering a bill that would provide tax relief to urban farms.

SALEM — Farmers who raise crops or livestock in urban areas could obtain property tax relief under an Oregon bill that would create urban agriculture incentive zones.

Supporters of House Bill 2723 say that urban farmers improve food security and teach city dwellers about agriculture but face a high property tax burden.

The legislation would allow cities and counties to designate zones where undeveloped land is subject to lower property tax rates so long as it’s used for agriculture for a minimum of five years.

Farmland in urban areas already qualifies for deferred property taxes, but HB 2723 creates a new system in which growers could benefit from lower rates right away, rather than in the third year of farming as currently required, said Ivan Maluski, policy director of the Friends of Family Farmers group.

Also, growers would not have to pay back taxes under the new program if they decide to stop producing crops or livestock after five years, he said.

Maluski said the bill encountered some concerns about enforceability and land use implications, which are addressed in a proposed amendment.

The revised language clarifies that HB 2723 only relates to property taxes and doesn’t affect the inventory of land available for development within urban growth boundaries, he said.

The amendment also lays out “checks and balances” that specify how local governments will assess properties that take advantage of the urban agriculture incentive zones, Maluski said.

If only a portion of a property is used for farming, the special assessment would only apply to that area under the bill.

The Oregon Farm Bureau’s main concern with the bill is that it not undermine the existing property tax deferral system for farmland, said Mary Anne Nash, public policy counsel for the group, during an April 7 hearing on the bill.

Because the urban agriculture incentive zone idea is novel, the program should be subject to a sunset in roughly five to six years so that lawmakers can evaluate how it’s performing, she said.

Jon Chandler, CEO of the Oregon Home Builders Association, said he would like for cities to consider such urban farms when calculating how much land to include in their urban growth boundaries.

Cities should be able to take into account how much time urban farms have taken advantage of the tax incentives — for example, a property that’s been in the program for 15 years may be unlikely to be converted to another use, he said.

Nash of ORB said that she found that concept “troubling” because such urban farms should not create additional pressure to expand urban growth boundaries.

In that situation, an urban farm may simply displace a rural farm, she said.

Rep. Brian Clem, D-Salem, said the bill contains a “natural check” on how much the program would actually be used, since cities and counties are unlikely to forgo tax revenue and landowners seldom want to give up the opportunity to develop their property.

Urban farming is growing in prominence and hopefully lawmakers can put the right “sideboards” around the tax program to make it feasible, said Rep Vic Gilliam, R-Silverton, who sponsored the HB 2723 along with Clem.

“Even if we’re not ready for prime time, I am hoping we can continue to discuss this,” he said.

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