7 years of back taxes a burden on land
Assessor wants state to open possibility of county-level relief
Sunday, December 23, 2012
Joe Beaudoin says he'd eventually like to roll back some of the farming efforts he's undertaken over the past 66 years.
Beaudoin, 72, owns Joe's Place Farms, an operation that grows apples, berries, tomatoes, corn and peaches. His 80 acres of fields are sprinkled across a two-mile area mostly taken up by houses or apartment complexes.
What was once forest and fields is now zoned for high-density residential. He's allowed to farm the land thanks to an exemption for agriculture. And he can afford to farm it, because his taxes are being calculated at a "current use value" that sits well below the market value.
Problem is, if he quits farming, his land won't be considered agricultural any longer. And when such lands are rezoned, state law requires the owner to pay back the past seven years of unrealized taxes, with interest and a 20 percent penalty.
"If you want to retire and keep your land, well, it's kind of tough to get out," Beaudoin said. "I thought somewhere down the line I would like to back off and not be so intensive at the farm. But I can't afford not to do it."
Beaudoin figures if he were to stop farming his main peach orchard, some five acres of land, he would owe around $250,000 in taxes because of the transition to residential land.
"I could probably pay it, but it would hurt bad," Beaudoin said, pointing out the orchard is only a small portion of his lands.
It's a worrying thought for him. Beaudoin says he knows he's getting older, and he doesn't have a natural heir to the farm.
"So what if someone gets sick," Beaudoin said. "If I had to retire right now, what would happen?"
What seems like the obvious financial solution, to sell the land and use the profits to pay the taxes, isn't that simple, says Clark County Assessor Peter Van Nortwick.
"For some who are looking to sell their lands, they're going to get hammered in taxes," Van Nortwick said. "There are lands where, in the past few years, the value may have crashed, but the taxes stay the same. It could be the difference between retiring comfortably and still scraping by."
Van Nortwick uses a recent change of use on 14 acres of land in the county as an example. The land was used for agriculture, and the "current use" value stayed pretty steady over the past seven years, at around $5,000 per year. But the market value fluctuated wildly.
In the 2007-08 tax year, the 14 acres was worth $1.5 million. In 2010-11, the land was valued at just over $400,000. So while the land may have sold at its current market value, the past seven years of taxes still take the peak value into account. That includes an interest rate of 1 percent per month, and a 20 percent penalty.
The total taxes due on the sale totaled just over $178,000.
"For our county government to bring in money, they need to develop," Van Nortwick said. "I think the goal is to get the land (owners) paying the market value of the property. So to have a penalty to get the land out of the agricultural use, it doesn't make sense."
In other words, Van Nortwick says, "people keep farming."
Van Nortwick has a solution he is floating to the legislature. He's not trying to repeal the state law, but he wants the 20 percent penalty to be a decision for county commissioners to make. That way, he says, each county can make the call. And, it may reduce the taxes enough to let more people get out of their lands and bring them into a use at the market value.
He's drafting legislation on the matter, and hopes to have a local representative introduce the change during the 2013 Washington legislative session.
State Representative Paul Harris, R-Vancouver, says he's on board with introducing a piece of legislation that gives counties the option to remove the 20 percent penalty.
"I would support that, and I'd be more than happy to introduce it," Harris said. "I think the penalty is too severe and it's not the right way to approach it. And I think giving counties the option, well, that would give a good chance to it gaining support."
The 2013 legislative session begins Jan. 14.