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Industry fights development conversion tax

By Paul Snyder

Builders groups are cheering on a bill that would suspend a tax developers and landowners face when they rezone agricultural land.

“The tax is a terrible thing to be doing at this time,” said Pat Stevens, general counsel for the Wisconsin Builders Association. “It just squeezed developers more in an already difficult economic climate.”

The state, in a Jan. 1 update to agricultural preservation law, created a conversion tax to be applied when land in a farmland preservation zoning district is rezoned.

The tax is equal to three times the highest assessed value of agricultural land in the municipality in which the rezoning is taking place, said Lisa Schultz, program manager with the Wisconsin Department of Agriculture, Trade and Consumer Protection. The average conversion tax is $810 per acre.

The goal, Schultz said, is to discourage landowners enrolled in the state’s farmland preservation program from rezoning for different developments. The state agency, she said, always had a penalty for rezoning but was never able to enforce it.

“The old process was a very complicated calculation based on local assessments that took a lot of time to figure out,” Schultz said. “We never had the staff to enforce it. Now it’s kind of a flat fee.”

But it’s too much for developers to bear, and it contradicts local planning efforts, said Tom Larson, director of regulatory and legislative affairs for the Wisconsin Realtors Association.

“Even if you meet local rezoning requirements, you have to pay a penalty,” he said. “On one hand, we’re saying we want to encourage local decision making, but the state can still impose a penalty even if it’s OK at the local level.”

State Sen. Dale Schultz, R-Richland Center, and state Rep. Brett Davis, R-Oregon, introduced the bill that would suspend the conversion tax. Neither lawmaker was available for comment before deadline.

Keith Foye, chief of the agriculture, trade and consumer protection agency’s land management section, defended the conversion tax and said it will help prevent piecemeal development of the roughly 7 million acres of agricultural land in Wisconsin.

“We realize we’re not going to protect all of it,” he said. “We just want to try to protect the big sections of farmland and see that development occurs in an orderly manner.”

But the tax, Stevens said, will hurt farmers as much as it hurts developers.

“Let’s say farmer Joe is getting toward the end of his life and thinking about selling his land for development,” Stevens said. “If he wants to rezone that land to make way so a developer can come in and put houses up, he’s going to be subject to this tax.”

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