LEGISLATIVE ACTION ALERT ...............

Illinois’ privately held forests are now in significant jeopardy. County Tax Assessors could soon be instructed by the State of Illinois to assess all private forest land at full value. This "Timberland Assessment" passed by the Illinois General Assembly initially and, then, held in ‘moratorium’ for some years by a Senate Resolution is now about to awaken. If the Timberland Assessment, as written by current law, is required to be exercised in each county, significant increases in property taxes for private forest landowners from 5 to 10 times current amounts could result. This increase in tax assessment will, undoubtedly, lead to private landowner decisions to abandon forest management plans, cut trees to achieve harvest requirements, and/or seek other alternative land uses to offset increase tax costs.

Background Problem:

According to information provided by the Illinois Forestry Development Council, IL IDNR, Division of Forest and Resources; "Illinois has some of the finest forest land in the Midwest. Today the total acreage of these lands is over 4.5 million acres. Sixty one percent (61%) of the native flora and 75% of the wildlife habitat are found in Illinois’ forests. Most of the forest land in Illinois (more than 90%) is owned by private landowners." During the 1970’s, land value assessments and subsequent real estate taxes brought significant economic pressures on private forest landowners to seek revenues on idle forested lands. Timber harvest contracts rose dramatically during this time and many forested parcels were being "high graded" for valuable timber.

The 1983 Solution:

To help solve this challenge, in 1983 and amended later in 1990, the Illinois General Assembly passed into law the Illinois Forestry Development Act (FDA) (525 ILCS 15). This Act created the Illinois Forestry Development Council, the Forestry Development Cost Share Program and the Forestry Development Fund. The Act also amended the Timber Buyers License Act, imposing a 4.0% harvest fee, and the property tax code to provide the tax incentives for those landowners to sustain forested parcels (5 acres or more) at 1/6th the assessed valuation with an approved Forest Management Plan.

The Change Since 1983:

Apparently, in reaction to the Forestry Development Act passed in 1983, another bill passed through the General Assembly of Illinois that would cause a significant tax increase on forested property without an IDNR sanctified "Forest Stewardship Plan". Generally speaking, a Forestry Stewardship Plan is a "board foot" harvest management plan, which isn’t necessarily a bad plan dependent upon your long term desire for the property.

It was not until two years ago that this effort once again reared its ugly head. At that time, well intentioned legislators put a two year moratorium (Senate Resolution 95) in effect until this mess could be sorted out. Unfortunately, the mess is still with us. This "timberland assessment", if it stays as it is, could increase property taxes 5 to 10 fold for some land owners. Other references point to the fact that if less than 50% is forest, then it is assessed as farmland.

Present Status:

Recently, Senate President Jones introduced SBOO17 which is recorded as follows:
Statutes Amended In Order of Appearance

35 ILCS 200/10-148 new

Synopsis As Introduced: Amends the Property Tax Code. Adds a Section concerning the assessment of certain timberland. Contains only a caption.

Unfortunately, no one knows what the Bill is intended to do and I think it amends the wrong section of the code.

Here is the original amendment which has caused all the heartache.

(35 ILCS 200/10-150) Sec. 10-150. Property under forestry management plan. In counties with less than 3,000,000 inhabitants, any land being managed under a forestry management plan accepted by the Department of Natural Resources under the Illinois Forestry Development Act shall be considered as "other farmland" and shall be valued at 1/6 of its productivity index equalized assessed value as cropland. In counties with more than 3,000,000 inhabitants, any land totaling 15 acres or less for which an approved forestry management plan was in effect on or before December 31, 1985, shall be considered "other farmland". The Department of Natural Resources shall inform the Department and each chief county assessment officer of each parcel of land covered by an approved forestry management plan. (Source: P.A. 88-455; 89-445, eff. 2-7-96.)

Example:

What does this mean to the state’s ecology? Let me explain by practical example. I have a friend that is currently paying $700 per year in taxes on 400 acres. Only 40 of his 400 acres are tillable. If enacted, his taxes are estimated to be $12,000-$13,000. His options at that point are:

• Develop a board foot forestry development plan (currently a 3 year waiting list to have the understaffed IDNR do it).
• Sell the property (development then is a possibility).
• Clear cut 161 acres of oak/hickory timber so he meets the 50% rule (destroys the ecology and could cause for erosion on highly erodilble soils).
• Convert at least 50%of the property into pasture (destroys the ecology and causes significant erosion problems on any highly erodible area).

This person loves the canopy an oak/hickory timber provides but, if he is to retain it, he would have to cut a large portion down or pasture it to stay financially solvent.

New Solution:

Repeal the legislation or accept legislation modifications that continue to provide a tax incentive by a fraction of full property valuation assessment which incorporate wildlife, wetland or other resource protections, conservation and sustainable forestry plans in lieu of the board foot forestry plan. Those plans should be able to be completed in a much shorter time frame. We don’t know yet what SB 0017 will contain.

Action Needed:

Immediately talk to and write to our legislators and let them know the economic burden that Illinois forest landowners would face and the terrible ecological consequences that will happen if this moves forward. Ask your boards to formulate positions and use your connections to the media to explain the consequences.

Final Note:

The forest tax proposal is a proposal made by committee member George Camille that State conservation groups support. It should be a positive that this is a committee proposal and made by a committee member who was selected by the Governors office.

FOREST TAX PROPOSAL

Introduction

Natural resource management has long been a challenge for the State of Illinois.
Although Illinois is the 4th largest state geographically, it ranks 48th in terms of public land per capita. More than 95% of Illinois is in private ownership and, therefore, 95% of Illinois’ opportunity to manage its natural resources relies on the private land owner. Although most landowners recognize the value of conservation and land stewardship, their land use decisions are driven by economics.

Property assessment and tax incentives have greatly influenced how land is used and managed. Currently, property tax incentives are offered to landowners who have land in agriculture, pasture, or are enrolled in selected conservation programs. The selected conservation programs that offer property tax incentives require an agricultural cropping history, perpetual easements or Forestry Stewardship Plan. The first 2 options for many landowners do not apply. Either they do not have a cropping history or they do not want a perpetual easement on their property. Therefore, in many cases, the landowner’s only option to receive tax incentives is to enroll in the Forestry Stewardship Plan. The main focus of this program is for landowners to develop forestry plans to enhance timber stands for production.

Issues:

Limited scope of current Forestry Stewardship Plan

The current tax incentive regarding the Forestry Stewardship Plan offers those who own timber a single option. Either a landowner elects to enroll in the forestry stewardship plan or forfeits any kind of tax incentive. The problem with this issue is that the Forestry Stewardship Plan is narrow in focus. The plan is designed to manage forested lands for production. There are many landowners who do not want to see their mature forest harvested to provide lumber. Many landowners recognize the value of their timber, but would much rather manage it for other natural resource benefits.

Unintended loss of native grasslands and wetlands

A second area of concern is land that is currently managed as a native grassland or wetland. These native grasslands and wetlands are disappearing faster than forested land, yet there are no provisions to offer tax incentives to landowners who plant, manage and/or create these ecosystems. The only option the owners of these lands have for a tax incentive is to enroll in the Forestry Stewardship Plan or convert them to agriculture. This option, in reality, is not viable. The current tax system therefore offers incentives to landowners which could result in further decline of two of Illinois’ most endangered ecosystems.

Proposed Solution:

It is clear the Forestry Stewardship Plan was a step in the right direction to address the States’ concern regarding the protection of critical ecosystems. Conservationists fully support the Forestry Stewardship Plan and recommend that the State broaden the scope of its efforts to provide tax incentives to those landowners who are stewards of the land. To that end, we are proposing 3 recommendations.

• Create additional stewardship plans that consider native grasslands, wetlands or a comprehensive stewardship plan.
  
• Extend the moratorium for 3 years to allow land owners to enroll in the programs and give the professionals enough time to write the plans.
  
• Encourage IDNR to partner with Non-governmental (NGO) conservation organizations (e.g. Pheasants Forever, National Wild Turkey Federation, Ducks Unlimited, etc.) and their professional staff to assist in the writing and managing of the afore mentioned plans.
  

These recommendations will not increase the acres available for this tax incentive. It will only provide better ecological options. Any land that could qualify for these programs currently qualifies for the Forest Stewardship Program. The difference is that these additions would address other valuable resources (native grasslands and wetlands) in Illinois. These plans will carry the same level of landowner commitment as the Forest Stewardship Plan. The inclusion of these new programs merely enables landowners of currently qualified land to enroll other natural resource management plans, as well as the Forest Stewardship Plan.

Illinois DNR staff currently faces a 2-3 year backlog of forestry plan design, creation and approval.

Recommendation three allows NGO conservation organizations to assist in the creation and design functions thereby reducing IDNR staff time and hopefully reducing the current backlog. IDNR would continue to approve and monitor plan compliance.

Recommendation two is necessary regardless of plan inclusion. Once landowners get their first tax bill, there will be a large influx of plan requests. Current IDNR staffing levels will not be able to meet this demand. The 2-3 year wait will increase for landowners, through no fault of their own.

Summary

It is incumbent on the State of Illinois to protect timber, native grasslands and wetlands in this agricultural dominated landscape. An efficient way to accomplish this goal is to offer tax incentives to private landowners. By expanding the plans offered to landowners the State can establish the proper ecosystem on the landscape, while not increasing the available acres for this tax exemption. Coupling this strategy with outside NGO conservation organization assistance and adequate time to implement these recommendations will provide greater opportunity for Illinois landowners while enhancing our states natural resources.