Tax policy can help save rural land
By Susan Ervin • Guest Columnist
The recent tax revaluations in Macon County have many people worried — not just about their own tax bill, which is plenty to worry about when your property value suddenly increases three-fold — but also about the impact such evaluation will have on the future of our lands and environment.
Some typical examples: a family with several hundred acres of land that they have owned for decades and do not want to sell had their evaluation go from $800,000 to $2.5 million. They are afraid they may have to sell due to high taxes. A friend with a little piece on Nantahala Lake, where they’ve always gone camping, thinks they will have to sell because they can’t justify the expense. Two adjoining properties, part of an old family farm, are owned by cousins; one cousin lets the cousin who still farms use her piece. Will she still be able to do that when her evaluation has gone from $150,000 to $512,000?
If you plan to sell, these values may be good news, but for all of us who don’t, who think of our land as home, where we will live our entire lives and then pass it on, this is very bad news.
The inflated revaluations are not the fault of the county commissioners. The county is required by law to do these revaluations, and North Carolina law requires that land be assessed at full market value. The commissioners have said that they may be able to lower the tax rate — the amount you pay in taxes per dollar value of the land — so that taxes may not go up in proportion to the revaluation. It would have been prudent of them to make this very clear before the revaluations went out; they could have lessened the blow. But even with a lower millage rate, I think we can all expect our tax bills to be appreciably higher and to see people selling land for development that they would not have otherwise, and loss of yet more rural land.
Where is the fault?
I think the biggest fault is in the perception that the “highest and best use” of land is as much development as you can get on it. This is obviously a self-defeating, short-term proposition. If all that those big mountaintop homes have to look at is other big mountain top homes, if everybody cuts the trees down so all they can see is everybody else who has cut the trees down, if the river is no longer a gem, if the trout are gone from the creeks and the sky is red at night, if there are no lovely farms left or country stores or old houses tucked in coves — the tourists and retirees and all those looking for beauty and tranquility will go somewhere else. And those of us who are here for the long haul will lead diminished lives, not only because of the bust of the economic boom but because we will have lost so much else that makes our lives here good. My neighbor, whose family has lived here since the Civil War, said yesterday, “It’s not a pleasure to sit on the porch anymore.”
Taking a more direct approach, there are changes that can be made in tax policy and exceptions to existing ones that might help us.
One of the most direct ways to keep your property out of the development market is to put a conservation easement on it. The wonderful and very dedicated people at the Land Trust for the Little Tennessee will work with you if your property is productive farmland or has other conservation values. A conservation easement lets the landowner set clear limits on development and specify the good stewardship methods to be used on the land, while reducing the assessed value, since this land is not going to be cut up into lots. North Carolina tax law stipulates that land permanently protected by conservation easement should be assessed on that basis rather than at market value, which should lower your property taxes. However, no clear guidelines have been established yet and we need to encourage our legislators to do that, so that each county isn’t left to make its own interpretation.
An extremely important program is the Present Use Value program for agricultural, forest and horticultural land, which significantly lowers the assessed value. We would be foolish to assume that we will not need farmland in the future and to not see it as a community responsibility to keep agricultural land viable.
Efforts are now being made in North Carolina to establish a new classification for wildlife management land to receive reduced assessments. As our landscape is further and further fragmented, individuals keeping land on which wildlife can thrive are doing a service for the rest of us. Tennessee has a Greenbelt Program that provides present use valuation for open space land as well as agricultural land. The reasoning is that open space enhances the value of surrounding land, conserves natural resources, and decreases sprawl. (If lands in these programs no longer qualify — that is, they are developed — then past taxes must be paid, so that one can’t just use the program as a tax shelter.)
Talk to your state elected representatives to let them know you support the expansion of the Present Use Value program and similar programs for open spaces.
Davidson, North Carolina has established a Rural Reserve Program in which property owners voluntarily restrict their property to its current use and thus qualify for a lower assessment. It’s similar to the Present Use Value program, but is done just on a local basis.
Another tax policy change that would help a wide range of landowners — from conservationists to property rights advocates to old-time Maconians trying to hang on to family land — is the Homestead credit. North Carolina has a very minimal homestead credit for low-income elderly people. But it could be extended to all citizens on their primary residence. If a property is your primary residence, you would get a tax credit that a property owner of a second — or third or tenth — home would not get. This would be especially fair in an area like Macon County where most of the growth is in second homes, primarily for relatively wealthy people from other more developed areas, to whom our real estate costs are affordable. In many places, especially places of great beauty, the locals get priced right out. The North Carolina coast is one example, and the mountains are not far behind. There’s talk of Highlands investing in affordable housing so teachers and workers and other not highly paid but essential people can still live there. Again, tell legislators to extend homestead credits to all primary residences.
Evening the odds
These measures are ways in which taxation can be more fairly distributed, with those who are using services paying more for them than those who aren’t. A highly relevant economic study, Fiscal Impact of Alternative Land Uses in Macon County, by Jeremy Jones and Susan Kask, shows that farmland, forest, and undeveloped land generates more public revenue than it receives back in public services, while residential property costs more in services than it pays. A recent compilation of nation-wide data on cost of community services by the American Farmland Trust shows working land and open space costing an average of 36 cents per acre in services while residential land costs $1.16.
The recent revaluation here demonstrates the truth of those studies. Our taxes are not going down because of the growth boom in residential properties; rather our need for revenue to pay for services and infrastructure is growing. The argument that we need growth for an increased tax base has been disproved, as it is seen time and time again that development is not paying its own way. I haven’t heard of a single instance in which taxes have gone down in response to development. Of course, growth and development have benefits for sectors of the economy. But that doesn’t mean that each property shouldn’t carry its own weight in taxes.
As our county grows and changes, for the quality of life of our residents and for continued appeal to tourists and new homebuilders, we need good land use planning, good environmental protection, good historical preservation, good building and design — and fair tax policies.