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New 2000 Appraisal Law Raises Questions About Process
ApplyingAccording to the Texas Forestry Association, approximately 91,000 are employed by the Texas forest industry earning in excess of $2.3 billion in wages and salaries each year. The total annual economic benefit to Texas from its forests is reported to be $22 billion. The Texas Forest Service (TFS) reported the value of timber harvested in 1998 to be $1 billion, making it the fourth largest agricultural commodity in Texas behind cattle, cotton and nursery crops.
Effective January 1, 2000, the 76th Texas Legislature amended the Property Tax Code to provide for restricted-use timberland appraisal to encourage reforestation of harvested lands and effective management practices. The Legislature directed the Comptroller’s office to develop an application form for this special appraisal. The form is available on the agency's Web site at http://www.window.state.tx.us/taxinfo/taxforms/50-281.pdf.
A property owner must apply before May 1 of the tax year to receive this special appraisal. The chief appraiser may grant a 15-day extension for good cause. The amendments to the Property Tax Code do not allow for late application for restricted-use timberland appraisal.AppraisingThe chief appraiser determines if the property owner's land qualifies for the special appraisal. The property owner may protest the chief appraiser's decision to the appraisal review board.
QualifyingIf the land is approved for special appraisal, the land's taxable value will be one half of the productivity value calculated for timberlands under Tax Code Section 23.73(a). The agency's Manual for the Appraisal of Timberland sets forth the method and procedures of appraising qualified timberland. Each appraisal office shall use the appraisal manual in appraising qualified land. The Comptroller's Property Tax Division (PTD) also uses the manual to calculate timberland values for the agency's annual property value study.
Timberlands harvested on or after January 1, 2000 and which are being reforested by seedling plantings or managed natural regeneration would qualify for restricted-use timberland appraisal. The regeneration must be to the degree generally accepted in the area for commercial timberland and with the intent to produce income.Denying appraisalThe TFS has developed recommended guidelines for determining adequate reforestation. These guidelines recognize that reforestation is a process which begins with final harvest and may take several years to complete, depending on drought and other conditions. The guidelines are available on TFS's Web site at http://txforestservice.tamu.edu/assist/legisltn/brochure.pdf.
Harvested and reforested lands granted the special appraisal would receive the reduced taxable value for 10 years after harvest.
In addition to harvested acreage, timberlands within one of three zones are also eligible for the restricted-use timberland appraisal. The zones are: aesthetic management, critical wildlife habitat and streamside management.
Aesthetic management zones are forestlands which the TFS has already determined are special or unique (based on natural beauty, topography or historic significance) or forestlands along public rights-of-way. The roadside buffers must be at least 100 feet but not more than 200 feet wide on either side, contain trees at least ten years old or be 35 feet tall and contain a tree density equaling 50 feet of basal area per acre.
Critical wildlife habitat zones are timberlands on which harvest is restricted to protect the habitat of plant or animal species listed as endangered or threatened by the Federal Endangered Species Act or listed as endangered by the Texas Parks and Wildlife Code. To qualify for the special appraisal, the landowner must provide three of the following seven benefits: habitat control, erosion control, predator control, providing supplemental supplies of water, providing supplemental supplies of food, providing shelters or making census counts to determine population.
Streamside management zones are to protect water quality or to preserve a waterway or body of water. To qualify as a streamside management zone, the landowner must restrict harvest based on a management plan using best management practices. The protection is provided by restricting harvest in buffers 50 feet from each bank of a waterway or body which contains water at least 30 percent of the year. The buffers could be as wide as 200 feet depending on slope, soil, cover type and proximity to public water supplies. A landowner must maintain a minimum of an average of 50 feet of basal area in the streamside management zones.
Lands qualifying for restricted-use timberland appraisal for the existence of these zones will receive the special appraisal as long as the qualifications are met. They are not limited to 10 years as is the case with lands qualifying under harvest and reforestation.
Before a chief appraiser may deny an application for restricted-use timberland appraisal based on aesthetic management, critical wildlife habitat and/or streamside management zones, the TFS must determine the validity of the zone. The TFS's determination is conclusive as to the type, size and location of the zone. The property owner or the chief appraiser may not protest the TFS's determination to the appraisal review board or appeal it to district court.The TFS has adopted administrative rules governing the determination process. More information is available on the TFS's Web site at http://txforestservice.tamu.edu/assist/legisltn/tax.htm#Sum.
No 1978 value
In 1978, Texas voters adopted a constitutional amendment providing for taxable values of timberlands to be based on productivity values rather than market values. So that the taxing units would not lose revenues, state law provided that a parcel’s timber productivity value could not be less than its 1978 market value. This minimum value, found in Property Tax Code Section 23.78, does not apply to restricted-use timberland appraisal.Changing useSection 23.78 on the minimum taxable value of timberland, states: "The taxable value of qualified timber land appraised as provided by this subchapter may not be less than the appraised value of that land for the taxing unit in the 1978 tax year, . . .(emphasis added)"
The subchapter referenced is Subchapter E (Appraisal of Timberland). Restricted-use timberland appraisal is based on Subchapter H, which does not set a minimum value.
Changing a qualified land's use does trigger "rollback taxes." If land qualifying for restricted-use timberland appraisal changes to a use that qualifies as timberland, appraised under Subchapter E, the land has a rollback tax. The additional tax will be based on the difference between the restricted-use timber value and the timber value for the five preceding years.Questions?If the change is to a use that does not qualify as timberland, the additional tax will be based on the difference between the restricted-use timber value and the land's market value for the preceding five years.
Seven-percent interest accrues from the time the differences would have become due. This rollback process is similar to that found for timberlands and open-space agricultural lands.
The rollback tax procedure does not apply if the change of use occurs as a result of a sale of right-of-way, condemnation or change in law.
For more information about this special appraisal, contact Sharon Hersh in the PTD's Land Studies Section by e-mail at sharon.hersh@cpa.state.tx.us or by calling 1-800-252-9121, extension 5-9816. In Austin, call 512/305-9816.Contributing to this article: Sharon Hersh