Amendment ASA1-AB700

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LRBs0354/1

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2013 - 2014 LEGISLATURE

ASSEMBLY SUBSTITUTE AMENDMENT 1, TO ASSEMBLY BILL 700

March 3, 2014 - Offered by Representatives Mursau and Clark.

AB700-ASA1,3,7 An Act to repeal 20.370 (1) (cx), 77.81 (5), 77.82 (1) (bn), 77.82 (2m) (ac), 77.82 (2m) (ag), 77.82 (2m) (am), 77.82 (2m) (c), 77.82 (2m) (dm) 1., 77.82 (2m) (dm) 2., 77.82 (3) (am), 77.82 (4g), 77.82 (4m) (d), 77.83 (2) (am), 77.83 (4) (b), 77.86 (2), 77.86 (3) (title), 77.87 (1g) (d), 77.88 (2) (a) 1., 77.88 (3g), 77.88 (4), 77.88 (5) (a) 1. and 2., 77.88 (5) (ab), 77.88 (5) (ar), 77.88 (5) (b), 77.88 (5) (c), 77.88 (6) and 77.91 (3); to renumber 77.81 (1), 77.83 (1m), 77.83 (4) (a), 77.86 (1) (a), 77.86 (1) (b) and 77.89 (2) (b); to renumber and amend 28.11 (8) (a), 77.06 (1), 77.81 (2m), 77.82 (12), 77.83 (1), 77.86 (1) (title), 77.86 (1) (c), 77.86 (1) (d), 77.86 (3), 77.88 (2) (a) (intro.), 77.88 (2) (a) 2., 77.88 (2) (a) 3., 77.88 (2) (e), 77.88 (2) (f), 77.88 (3), 77.88 (5) (a) (intro.) and 77.89 (2) (a); to amend 20.370 (5) (bv), 20.370 (5) (bz), 74.23 (1) (a) 2., 74.25 (1) (a) 2., 74.25 (1) (a) 3., 74.30 (1) (b), 74.30 (1) (c), 77.07 (2), 77.07 (3), 77.81 (6), 77.82 (1) (a) 1., 77.82 (1) (a) 2., 77.82 (1) (b) 3., 77.82 (2m) (title), 77.82 (3) (title), 77.82 (3) (ag), 77.82 (3) (ar), 77.82 (3) (c) (intro.), 77.82 (3) (g), 77.82 (4), 77.83 (2) (a), 77.83 (2) (b), 77.84 (3) (b), 77.86 (4), 77.86 (5) (a), 77.86 (5) (b), 77.87 (1), 77.87 (2), 77.87 (3), 77.87 (5), 77.876 (1), 77.876 (4), 77.88 (title), 77.88 (1) (b) 1., 77.88 (1) (c), 77.88 (2) (am), 77.88 (2) (b), 77.88 (2) (c), 77.88 (3) (title), 77.88 (3j) (c), 77.88 (3m), 77.88 (5) (am) 1., 77.88 (5m), 77.88 (7), 77.88 (8) (b), 77.883 (3), 77.885 (intro.), 77.89 (1), 77.89 (2) (title), 77.895 (2), 77.91 (3m) and 167.31 (4) (cr); to repeal and recreate 77.86 (title); and to create 28.11 (8) (a) 2., 77.10 (2) (d), 77.81 (1d), 77.81 (2r), 77.81 (4m), 77.82 (1) (a) 1m., 77.82 (1) (bp), 77.82 (3m), 77.82 (12) (a) 2., 77.82 (12) (a) 4., 77.82 (12) (a) 5., 77.82 (12) (a) 6., 77.83 (1b), 77.83 (1c), 77.83 (1m) (b), 77.83 (2) (ar), 77.83 (2) (d), 77.86 (1g) (title), 77.86 (4m), 77.88 (2) (a) (title), 77.88 (2) (ac) (title), 77.88 (2) (d) (title), 77.88 (2m), 77.88 (3) (am), 77.88 (3) (b) (title), 77.88 (3) (b) 1. (intro.) and 2., 77.88 (3) (c), 77.88 (3) (d), 77.88 (3j), 77.88 (3k), 77.88 (3L), 77.88 (4m), 77.88 (5) (ac), 77.88 (5) (am) (title), 77.89 (3) (title) and 77.91 (7) of the statutes; relating to: eligibility requirements under the managed forest land program relating to parcel size and production of merchantable timber, management plans for managed forest lands, orders adding and withdrawing managed forest land, renewal of orders designating managed forest land, areas of managed forest lands that are open for public access, allowing managed forest lands to be used for recreational activities, regulation of cutting of timber on managed forest land and on forest croplands, withdrawal taxes and fees imposed on the withdrawal of managed forest land and yield taxes imposed for cutting timber from managed forest land, the sale or transfer of managed forest land, expiration of orders designating managed forest land, withdrawal of forest croplands that are held in trust for Indian tribes, a study of the managed forest land program, a report on exempt withdrawals from the managed forest land program and the forest cropland program, elimination of references to the woodland tax law, grants for land acquisition for certain outdoor activities, payments to counties for designated county forest lands, extending the time limit for emergency rule procedures, providing an exemption from emergency rule procedures, granting rule-making authority, requiring the exercise of rule-making authority, making an appropriation, and providing a penalty.

Analysis by the Legislative Reference Bureau

Under current law, certain forested land may be designated as managed forest land (MFL) under a program administered by the Department of Natural Resources (DNR). Under this program, the owner of land designated as MFL makes an annual acreage share payment that is lower than, and in lieu of, the property taxes that normally would be payable. In exchange, the landowner must comply with certain forestry practices and have a management plan prepared for the land. The owner must also open the MFL to the public for hunting, fishing, hiking, sight-seeing, and cross-country skiing, but may designate up to a certain number of acres as being closed to the public. For MFL that is designated as closed, the owner must make an additional payment per acre. A landowner seeking to have land designated as MFL submits an application to DNR that contains a management plan for the land. If the MFL meets the eligibility requirements under the program, which include minimum acreage requirements and requirements as to how much merchantable timber can be produced on the land, DNR approves the application and issues an order designating the land as MFL. A landowner may choose to have the order last 25 or 50 years.

A similar program exists for land designated as forest croplands (FCL). Since July 1985, no new land may be subject to the FCL program. However, there is forest land that is currently in this program since the designations last for 25 or 50 years.

Eligibility under the managed forest land program

Under current law, for a parcel of land to be eligible to be designated as MFL it must be at least ten contiguous acres in size. Also, at least 80 percent of the parcel must be producing or be capable of producing a minimum of 20 cubic feet of merchantable timber per acre per year. The parcel may have public or private roads or railway or utility rights-of way running through it. This substitute amendment increases this minimum acreage requirement from ten acres to 15 acres except for certain parcels that are already designated as MFL.

Under current law, a parcel that is developed for a human residence is not eligible for designation as MFL. Under the substitute amendment, a parcel is not eligible if there is any building, or any improvement associated with a building, located on the parcel. The substitute amendment defines a building to include any structure used as shelter, as a place of employment, or as storage. Under the substitute amendment, an "improvement" includes any accessory building, structure, or fixture that is placed on a parcel for the parcel's benefit. The substitute amendment also specifically excludes roads, certain rights-of way, fences, and other structures from being considered improvements.

Open and closed lands

This substitute amendment requires the owner of open MFL to ensure that the public has access to the land, except with respect to certain parcels of MFL that are a large property. The substitute amendment defines a large property to be one or more separate parcels of MFL and FCL that are under the same ownership and that are collectively greater than 1,000 acres in size. Sometimes, open MFL is surrounded by closed MFL or other private property, making it impossible for the public to have access to the land without having permission from an owner of some of the surrounding land. Under the substitute amendment, the method and location of access to open MFL must be equivalent to the method and location that is used by the owner of the MFL. If the owner is unable to provide such access, DNR must modify the designation of the land from being open to being closed.

Under current law, an owner of MFL may not lease the land or enter into any other agreement under which the owner receives consideration for the purpose of allowing persons to engage in certain recreational activities, such as hunting, hiking, horseback riding, and staying in cabins on the MFL. Current law provides an exception for agreements under which reasonable membership fees are charged by a nonprofit organization and that are approved by DNR.

This substitute amendment repeals this prohibition and specifically authorizes owners of MFL to enter into leases or other agreements to allow closed MFL that is not part of certain large properties to be used for recreational activities (leasable MFL). The substitute amendment also expands the types of recreational activities for which the land may be leased to include any recreational outdoor activity that DNR determines to be compatible with the practice of forestry.

Current law imposes limitations on the amount of MFL that may be closed to public access. Generally, the maximum amount that may be closed is 160 acres in a single town, city, or village or one or a combination of any two of the following areas as found on government surveys: quarter quarter sections (40 acres), fractional lots (usually somewhat less than 40 acres), or government lots (also, usually somewhat less than 40 acres). This substitute amendment modifies this limitation so that an owner of MFL, other than an owner of a large property that is not leasable, may close any or all of the owner's MFL.

Under current law, an owner of MFL may modify a designation of open or closed land two times during the term of a MFL order. Under this substitute amendment, an owner of leasable MFL who has modified a designation two times before January 1, 2015, may make one additional modification during the term of the order.

Sales and transfers of land under the managed forest land program

Under current law, an owner may sell or otherwise transfer an entire parcel of MFL. An owner may also sell or transfer part of a parcel of MFL if the land being sold or transferred is all of the owner's land located in a quarter quarter section or in a government lot or fractional lot. This substitute amendment eliminates these restrictions so that any owner may sell or transfer an entire parcel or any part of a parcel.

Under current law, the land remaining under an MFL order after a sale or transfer of part of a parcel continues to be eligible as MFL and does not need to be withdrawn regardless of its size if it is all in one piece (contiguous) and will meet the productivity requirements for producing merchantable timber, if it is not developed for a human residence, and if it is not used for commercial recreation, for industry, or for any other purpose that DNR determines to be incompatible with the practice of forestry. Under the substitute amendment, in order for the remaining land to continue to be eligible as MFL, it must be contiguous and at least 15 acres in size and, under most circumstances, a building or structure may not be on the land.

Withdrawals of managed forest land

Under current law, DNR may issue an order withdrawing land from a parcel that has been designated as MFL under certain circumstances. These include a determination by DNR that the land does not comply with the eligibility requirements under the program or that the owner has failed to comply with the requirements of the program or with the management plan prepared for the land. Current law also allows owners to voluntarily withdraw land under certain circumstances. Under current law, an owner may withdraw all of the owner's land or all of the land that is in a quarter quarter section or in a government or fractional lot. An owner may also voluntarily withdraw land on a one-time basis under certain circumstances for the purpose of construction of a residence. When land is voluntarily withdrawn for this purpose, the owner must pay withdrawal taxes on the MFL that is withdrawn and a withdrawal fee.

This substitute amendment creates additional provisions that allow MFL to be voluntarily withdrawn. The substitute amendment eliminates the provisions that apply only to withdrawal for construction of a residence. Under the substitute amendment, an owner may voluntarily withdraw part of an MFL parcel for the purpose of selling it or using it as a construction site, regardless of whether the construction site is a construction site for a residence. Under this provision, the land withdrawn may not be less than one acre and may not be more than five acres. The substitute amendment limits the number of times that MFL may be withdrawn for this purpose and requires the owner to pay the withdrawal taxes and the withdrawal fee.

Under the substitute amendment, MFL may also be voluntarily withdrawn by an owner if DNR determines that part of a parcel is unsuitable for the production of merchantable timber, due to environmental, ecological, or economic or other concerns, or if DNR determines that the parcel is unable to produce merchantable timber in the amount required under the MFL program. The owner may withdraw only the number of acres that is necessary for the parcel to resume sustainable production of merchantable timber or to resume its ability to meet the merchantable timber production requirement described above. The owner is exempt from paying a withdrawal tax or fee for these types of withdrawal.

Assessment of withdrawal taxes and yield taxes

Under current law, when DNR issues an order of withdrawal that requires the payment of a withdrawal tax and fee, DNR determines the amount of the tax and assesses the tax and fee against the owner. Withdrawal taxes are assessed for voluntary and DNR withdrawals, as described above, withdrawals that are required when land is no longer eligible as MFL due to the sale or transfer of part of a parcel, and withdrawals that are required as a result of failing to pay property taxes.

Under this substitute amendment, once DNR has issued the order of withdrawal, the county in which the MFL is located, instead of DNR, determines the amount of the tax and assesses the tax and the fee against the owner.

Similarly, under current law, when merchantable timber is cut from MFL, DNR determines the amount of the yield tax and assesses that amount. Under the substitute amendment, the county in which the MFL is located assesses the yield tax.

Calculation of withdrawal taxes

Under current law, the withdrawal tax is the higher of two amounts: the amount of past tax liability, less the acreage share payments and yield taxes paid (taxes paid), or 5 percent of the stumpage value of the merchantable timber on the land, less the taxes paid. Under current law, variations on this method of calculating the withdrawal taxes are used depending on when the land was designated as MFL, how long the land has been designated as MFL, and whether the MFL is subject to an original order or an order that has been renewed.

This substitute amendment eliminates these methods of calculating the withdrawal tax. Instead, the substitute amendment creates a single method of calculating this tax. Under the substitute amendment, the amount of withdrawal tax is calculated by multiplying the total net property tax rate imposed by the city, town, or village (municipality) in which the land is located by the assessed value of the land being withdrawn, and then multiplying that amount by ten years, or the number of years the MFL was subject to the order, whichever is fewer.

Distribution of assessed withdrawal taxes and yield taxes

Under current law, DNR deposits the yield taxes and withdrawal taxes it collects in the conservation fund. DNR then makes a payment to each municipality in which the MFL is located that is equal to the amount of withdrawal tax or yield tax assessed by DNR that is applicable to the MFL in that municipality. Under this substitute amendment, the county that assesses the yield and withdrawal taxes distributes to each municipality in the county in which the MFL is located 80 percent of applicable yield or withdrawal taxes. The county retains the remaining 20 percent. The county also keeps the withdrawal fees.

Renewals of MFL orders

Under current law, an MFL order may be renewed at the end of its 25-year or 50-year term. DNR may deny an application for renewal only if the land does not comply with the eligibility requirements, the owner has failed to comply with the management plan for the MFL, or delinquent taxes are owed on the land. This substitute amendment creates additional grounds that DNR may use for denying a renewal application. Under the substitute amendment, DNR may deny the application if the land that is subject to the renewal application is not identical to the MFL under the existing order or if certain requirements for establishing, updating, and reviewing mandatory forestry soil and conservation practices in a management plan are not met.

Large properties; cuttings; management plans

This substitute amendment creates different cutting notice requirements for large properties. Under current law, an owner of MFL or FCL must file with DNR a notice of intent to cut merchantable timber at least 30 days before the cutting. DNR must approve the cutting if it finds that the cutting is in conformance with the owner's management plan and is consistent with sound forestry practices. The substitute amendment exempts the owner of a large property from having to file cutting notices if an independent forestry organization recognized by DNR certifies that the owner is qualified to ensure that its timber cutting is consistent with sound forestry practices and if the owner complies with rules regulating cutting practices that are promulgated by DNR.

Under current law, a landowner must submit with the MFL application a management plan that contains a statement of the owner's forest management objectives, a description of the forestry and soil conservation practices that will be undertaken on the MFL, and supporting maps, aerial photographs, or diagrams. Under the substitute amendment, DNR may modify these general requirements for management plans that are prepared for large properties. In determining whether to do so, DNR must consider certain factors. These factors include how much MFL the applicant already owns and whether the applicant has consistent access to technical forest management assistance.