Minnesota law requires assessors to value property at its estimated market value. Estimated market value must reflect the use of the property that will bring the greatest economic return to the land (its
highest and best use). For many farm properties, the highest and best use may be to develop the land for a residential or commercial use. The residential or commercial value of a property has typically been significantly higher than that of farmland although the last few years the market has seen a greater increase in farmland values.
Protecting Agricultural Property Values
In the 1960s, the Legislature recognized that urban sprawl was causing valuation and tax increases that had the potential of forcing farmers off their land in certain situations. The Legislature developed a mechanism that allowed qualifying farmers to pay real estate taxes based upon the agricultural value of their land, while deferring the higher property taxes attributed to the land’s value as residential or commercial property. This law, officially known as the Agricultural Property Tax law, is commonly referred to as Green Acres and is codified in Minnesota Statute section 273.111.
Changes to Qualifying Properties
In 2008, the Legislature amended the law to clarify that, going forward, only class 2a productive agricultural land can qualify for Green Acres. Class 2b rural vacant land that is currently enrolled in Green Acres may be grandfathered into the program until the 2013 assessment. Beginning with the 2013 assessment, any class 2b rural vacant land that has been
grandfathered into Green Acres will be removed from the program and deferred taxes may be collected.